Use the Following to Answer Questions

question 210

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.If one firm decides to cheat,the cheating firm will:

• A) be able to increase its profits initially.
• B) find that cheating leads to a decrease in its profits alone.
• C) find that cheating initially leads to an increase in both firms' profits.
• D) find that the other firm has an increase in its profits alone.

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Definitions:

Explanations

The process of making something clear or understandable, often involving the provision of reasons, causes, or justifications.

Effectiveness

The degree to which something is successful in producing a desired result or outcome; in a second definition, the capability of producing the intended result or achievement of objectives.

Persuade

To convince someone to do or believe something through reasoning or argument.