Author Question: Refer to the scenario above. In this case, how much should Tom pay for a used iPhone? A) 80 B) ... (Read 88 times)

Chloeellawright · **on:** Jun 29, 2018

Refer to the scenario above. In this case, how much should Tom pay for a used iPhone?

A) 80
B) 40
C) 60
D) 0

Question 2

In the Boeing/Airbus oligopoly example discussed in the text, why did Boeing and Airbus have an incentive to produce more planes than the monopoly outcome?

What will be an ideal response?

frejo · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B

Answer to Question 2

Both Boeing and Airbus wanted to produce more planes than the monopoly outcome because each realized that if it and it alone produced an additional plane, its profit increased. Of course, the profit of its competitor would decrease, but that does not matter to the calculations made by Boeing and Airbus.