Suppose Acme and Mega produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. 
Suppose Acme and Mega decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Mega cheats on the agreement by reducing its price to $1 and Acme matches the price cut, then if consumers are evenly split between the two firms, Acme's economic profit will be ________.
A. $100
B. $75
C. $150
D. $200
Answer: B
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Safety Training One task of Mega Manufacturing's Human Resource Department is to perform periodic safety training at Mega's various plants. HR is run as a profit center with each plant manager paying for this safety training via a transfer price
Recently, some of the plant managers have been hiring outside firms for their safety training. HR has complained to corporate that they will have to lay off staff if this continues but the plant managers reply that they are maintaining their acceptable safety record at a lower cost. What does this imply about the transfer price?
Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment. Pat's accounting profit is ________, and Pat's economic profit is ________.
A. $50,000; $15,000 B. $15,000; -$1,000 C. $34,000; $15,000 D. $34,000; -$1,000
In the long-run...
What will be an ideal response?