Use the Following to Answer Questions

question 94

Multiple Choice

Use the following to answer questions :
Scenario: Two Identical Firms
Two identical firms make up an industry in which the market demand curve is represented by Q = 5 000 - 4P,where Q is the quantity demanded and P is the price per unit.The marginal cost of producing the good in this industry is constant and equal to $650.Fixed cost is zero.
-(Scenario: Two Identical Firms) Use Scenario: Two Identical Firms.When the firms collude and produce the profit-maximizing output,what is the profit earned by each firm if they split production equally?

• A) $360 000
• B) $180 000
• C) $15 000
• D) $25 000

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Definitions:

Share

A unit of ownership interest in a corporation or financial asset, representing a portion of the equity and potentially entitling the shareholder to dividends and certain rights in the company’s decisions.

Annual Payments

Annual payments refer to the total amount of money that is paid out or required to be paid each year, often related to loans, annuities, or dividends.

Borrowed

The act of obtaining or receiving funds or goods with the promise or understanding of returning or repaying the lender at a later date, usually with interest.

Interest Rate

The proportion, in a percentage, at which interest is paid by borrowers for the use of money that they borrow from a lender. It is a critical component of the credit markets.