Use the following to answer question:
-(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets with no marginal cost or fixed cost.Suppose that these two producers have formed a cartel,agreed to split production of output evenly,and are maximizing total industry profits.If Margaret decides to cheat on the agreement and sell 100 more gadgets,Margaret's profit will be _____,and Ray's profit will be _____.
A)$1,250;$1,250
B)$500;$500
C)$1,400;$1,000
D)$1,000;$1,400

Question

Use the following to answer question: 
-(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets with no marginal cost or fixed cost.Suppose that these two producers have formed a cartel,agreed to split production of output evenly,and are maximizing total industry profits.If Margaret decides to cheat on the agreement and sell 100 more gadgets,Margaret's profit will be _____,and Ray's profit will be _____.
A)$1,250;$1,250 
B)$500;$500 
C)$1,400;$1,000 
D)$1,000;$1,400

Quizplus · Accepted Answer

Margaret's decision to sell 100 more gadgets than agreed upon allows her to capture a larger share of the market, thus increasing her profits at the expense of Ray's profits. This is a common outcome in scenarios where cartel agreements are not enforceable, leading to a breakdown in the cooperation and a shift towards competitive behavior.

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