Imagine a Duopoly in Which Two Firms,A and B,produce the Monopoly

question 91

Multiple Choice

Imagine a duopoly in which two firms,A and B,produce the monopoly profit-maximizing output and equally share the economic profit.If firm A increases output,

• A) both firms' profits increase.
• B) firm A's profits increase and firm B's profits decrease.
• C) firm B's profits increase and firm A's profits decrease.
• D) both firms' profits decrease.
• E) firm A's profits increase and firm B's profits do not change.

---

Definitions:

Par Value

The face value of a bond or stock as stated by the issuer, which may differ from its market value.

Retained Earnings

Profits that a company retains for reinvestment rather than distributing to shareholders as dividends.

Dividends Payable

A liability account on a company’s balance sheet indicating the amount owed to shareholders in the form of dividends to be paid out.

Stock Split

A corporate action that increases the number of a corporation's outstanding shares by dividing each share, which may lower the share price.