In 2011, Three Firms (Firm A, Firm B, and Firm

In 2011, three firms (Firm A, Firm B, and Firm C) were selling cellular phone service for a price of $40 per month in Playa del Carmen, Mexico. Each firm serviced 100 cellphone customers; thus, all firms together serviced a total of 300 customers. Assume marginal cost is 0 (zero) for all firms and thus total revenue is equal to total profit. In 2012, Firms A and B each continued to service 100 customers, but Firm C now serviced 150 customers; thus, all firms together serviced a total of 350 customers. All firms now charge $30 per month. Firm C's monthly profit increased by _________ due only to the output effect and decreased by _________ due only to the price effect, for a net increase of $500.

A) $2,500; $2,000
B) $3,000; $2,500
C) $500; $0.00
D) $1,500; $1,000
E) $3,500; $3,000