Tina's Bakery and Cliff's Cupcakes & More participate in a duopoly and are maximizing profits by cooperating. If Tina decides to increase her production of baked goods, her profits would _____, and Cliff's profits would:

Question

Quizplus · Accepted Answer

In a duopoly where firms are cooperating to maximize profits, if one firm (Tina's Bakery) increases production, it typically saturates the market, reducing the price or demand for both firms' products. Tina might see a temporary increase in profits due to higher sales volume, but Cliff's profits would decrease because the overall market price or demand for similar goods would likely drop, affecting his sales negatively.

Tina's Bakery and Cliff's Cupcakes & More Participate in a Duopoly