Suppose a Duopoly Had Reached the Monopoly Outcome and Then

question 196

Multiple Choice

Suppose a duopoly had reached the monopoly outcome and then the first firm increased its production.If the second firm next increases its production,the second firm's profit ________ and the first firm's profit ________.

• A) increases; increases
• B) increases; decreases
• C) decreases; increases
• D) decreases; decreases
• E) increases; does not change

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Definitions:

Federal Unemployment Tax Rate

The percentage rate at which employers are taxed by the federal government to fund the unemployment benefits pool.

FICA Tax Rates

The percentage rates set by law that determine the amount of Social Security and Medicare taxes that must be withheld from employees' paychecks and matched by employers.

Employer's Taxes

Taxes that employers are required to pay on behalf of their employees, such as social security and Medicare taxes in the United States.

Gross Pay

The total amount of money earned by an employee before any deductions or taxes are taken out.