-Suppose the demand curve shown in the diagram above represents the demand curve for a profit-maximizing cartel with two rival firms of equal size and efficiency,each with zero marginal cost.If the market price is currently set at $1.00 and it is difficult to detect price-altering activities,the dominant strategy for each firm is to
A) raise price to gain market share.
B) lower price in order to increase society's surplus.
C) lower price in order to increase its profit.
D) lower price in order to capture the entire market.
E) lower price both in order to increase its profit and to capture the entire market.

Question

-Suppose the demand curve shown in the diagram above represents the demand curve for a profit-maximizing cartel with two rival firms of equal size and efficiency,each with zero marginal cost.If the market price is currently set at $1.00 and it is difficult to detect price-altering activities,the dominant strategy for each firm is to
A) raise price to gain market share. 
B) lower price in order to increase society's surplus. 
C) lower price in order to increase its profit. 
D) lower price in order to capture the entire market. 
E) lower price both in order to increase its profit and to capture the entire market.

Quizplus · Accepted Answer

The Answer of 
-Suppose the demand curve shown in the diagram above represents the demand curve for a profit-maximizing cartel with two rival firms of equal size and efficiency,each with zero marginal cost.If the market price is currently set at $1.00 and it is difficult to detect price-altering activities,the dominant strategy for each firm is to
A) raise price to gain market share. 
B) lower price in order to increase society's surplus. 
C) lower price in order to increase its profit. 
D) lower price in order to capture the entire market. 
E) lower price both in order to increase its profit and to capture the entire market.

-Suppose the Demand Curve Shown in the Diagram Above Represents