-(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

Quizplus · Accepted Answer

If the firms collude to share the market demand equally, each firm will face half of the market demand, so their individual demand curve remains D₁, but together they face the entire market demand, which is D₂.

-(Exhibit: Monopoly Through Collusion) the Exhibit Illustrates the Situation in an Industry