Use the Following to Answer Question

question 122

Multiple Choice

Use the following to answer question:
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.The figure shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits.Which assumption is NOT a part of the analysis illustrated by the model?

• A)The two firms are identical.
• B)The two firms sell identical products.
• C)While the firms face the same MC curves,their respective TC curves have unequal slopes.
• D)Each firm has a horizontal marginal cost curve.

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Definitions:

Choice Set

The collection of all possible options available for selection by a decision-maker.

Leftover Income

The amount of income that remains after all necessary expenses, such as bills and living costs, have been paid.

Budget Constraint

A limit on the consumption bundles that a consumer can afford given their income and the prices of goods.

Equation

A mathematical statement that asserts the equality of two expressions, usually denoted by the symbol '='.