Refer to Table 14-8. If the two firms collude, is there an ...

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Refer to Table 14-8. If the two firms collude, is there an incentive for either to cheat on the collusion agreement?
 
  A) Yes, but only Brawny Juice is in a position to gain by cheating.
  B) Yes, but only Power Fuel is in a position to gain by cheating.
  C) Yes, either firm can gain if it, alone, cheats.
  D) No, neither firm can gain by cheating.

Question 2

Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?
 
  A) The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed.
  B) The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.
  C) The shape of the LRATC is affected by the law of diminishing returns.
  D) The SRATC, but not the LRATC, can be used by a firm's managers for planning.

[Zebsrer]

Answer to Question 1

C

Answer to Question 2

A