Two firms in an industry act as a cartel, with each firm agreeing to charge a price of $16 and sell two units of output. If one of them cheats and produces two more units of output, the cheating firm's total revenue increases by ______ and the other firm's total revenue decreases by ______.
Fill in the blank(s) with the appropriate word(s).
Answer: $24; $4
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A shift of the U.S. demand curve for Mexican pesos to the left and a decrease in the peso price per dollar would result from
a. an increase in the U.S. inflation rate relative to the rate in Mexico. b. a change in U.S. consumers' tastes away from Mexican products and toward products made in South Korea, India, and Taiwan. c. U.S. buyers perceiving that domestically - produced products are of a lower quality than products made in Mexico. d. all of the above answers are correct.
Which of the following might lead banks to hold more reserves?
A. An increase in the demand for loanable funds B. A decrease in the legal reserve requirement C. Fear that customers will want to withdraw most of their deposits D. Fear that businesses may decide to borrow less to fund investments
Price discrimination is best defined as
A. The selling of an individual good at different prices to different consumers by a single seller. B. The selling of differentiated goods to consumers at different prices. C. Charging an excessive price for a product. D. The charging of different prices by different companies for the same product.
Social choice involves all of the following except
A. understanding the incentives facing politicians and public servants. B. consistently efficient decisions through the use of majority rule voting. C. deciding what society wants. D. aggregating over individual preferences.