Use the following to answer question(s): Monopoly Through Collusion

-(Exhibit: Monopoly Through Collusion) The exhibit illustrates the situation in an industry that consists of two firms facing identical demand curves; the demand curve for each firm is D₁.If the firms collude and agree to share the market demand equally, then each firm will act as if its demand curve is given by _______ and the market demand curve is given by _______ .

Question

Use the following to answer question(s): Monopoly Through Collusion
 
-(Exhibit: Monopoly Through Collusion) The exhibit illustrates the situation in an industry that consists of two firms facing identical demand curves; the demand curve for each firm is D₁.If the firms collude and agree to share the market demand equally, then each firm will act as if its demand curve is given by _______ and the market demand curve is given by _______ .

Quizplus · Accepted Answer

When the firms collude and agree to share the market demand equally, each firm will act as if its demand curve is given by D₁, which is identical to the original demand curve. However, the market demand curve will shift to D₂, which represents the combined demand of both firms. Therefore, the correct answer is option C, which shows that each firm still faces the same demand curve D₁, but the market demand curve becomes D₂.

Use the Following to Answer Question(s): Monopoly Through Collusion