There are only two firms in an industry with demand curves q1 = 30 - P and q2 = 30 - P. Both have no fixed costs and each has a marginal cost of 10 per unit produced. If they behave as profit-maximizing price takers, each produces 20 units and sells them at a price of 10 so that each firm makes zero economic profits. Suppose the two firms form a cartel. While firm 1 produces one-half of the profit-maximizing cartel output, firm 2 cheats and produces 5 units more. What would happen to the two firms' economic profits?
A) Firm 1's profits remain the same, but firm 2's profits increase by 10.5
B) Firm 1's profits decrease by 5.5, but firm 2's profits increase by 11.
C) Firm 1's profits decrease by 25, but firm 2's profits increase by 12.5.
D) Firm 1's profits decrease by 12.5, but firm 2's profits increase by 25.
Question 2
In the short run, the competitive firm will hire more labor if
A) the wage rate increases.
B) the price the firm receives for the output increases.
C) the price the firm receives for the output decreases.
D) a specific tax is imposed on the output.
Comparison of the titration curves of three weak acids
Representative Light Curves of Eclipsing Binaries
Natural Resources and Industry
The growth in demand for energy use is met by burning fossil fuels
The growth in demand for oil in China is driven by the growth in demand for personal transport
Two Kinds of Forgetting Curves