Two firms in an oligopolistic market, Firm A and Firm B, face the demand schedule shown.

If the two firms agree to act like a monopolist and split the market, they will each produce 150 units at a price of $50, creating a total of 300 units in the market. Which of the following statements is true?If they each produce 150 units, eachfirm will earn revenue of $7,500.If Firm A decides to increase production by 50 units under the assumption that Firm B will continue to produce 150 units, Firm A's revenue will be $8,000.If both Firm A and Firm B increase production by 50 units, they will each earn revenue of $6,000.

Question

Two firms in an oligopolistic market, Firm A and Firm B, face the demand schedule shown.

If the two firms agree to act like a monopolist and split the market, they will each produce 150 units at a price of $50, creating a total of 300 units in the market. Which of the following statements is true?If they each produce 150 units, eachfirm will earn revenue of $7,500.If Firm A decides to increase production by 50 units under the assumption that Firm B will continue to produce 150 units, Firm A's revenue will be $8,000.If both Firm A and Firm B increase production by 50 units, they will each earn revenue of $6,000.

Quizplus · Accepted Answer

The Answer of Two firms in an oligopolistic market, Firm A and Firm B, face the demand schedule shown.

If the two firms agree to act like a monopolist and split the market, they will each produce 150 units at a price of $50, creating a total of 300 units in the market. Which of the following statements is true?If they each produce 150 units, eachfirm will earn revenue of $7,500.If Firm A decides to increase production by 50 units under the assumption that Firm B will continue to produce 150 units, Firm A's revenue will be $8,000.If both Firm A and Firm B increase production by 50 units, they will each earn revenue of $6,000.

Two Firms in an Oligopolistic Market, Firm a and Firm