Which of the following is likely to occur if two firms in a duopoly market decide to collude and produce the same output and charge the same price?
A)Each firm will receive twice the profit they earned before the agreement.
B)Together the firms will produce less than the monopoly output.
C)Each firm will receive exactly half of the monopoly profit.
D)None of the firms will have an incentive to charge a lower price.

Question

Quizplus · Accepted Answer

When two firms in a duopoly collude, they can act like a monopoly, maximizing joint profits and splitting them, typically resulting in each firm receiving half of the monopoly profit.

Which of the Following Is Likely to Occur If Two