Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. Suppose Quick Buck and Pushy Sales decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Quick Buck cheats by reducing its price to $1 while Pushy Sales continues to comply with the collusive agreement, then Quick Buck will sell ________ units and Pushy Sales will sell ________ units.
A)0; 3,000
B)3,000; 1,000
C)2,000; 1,000
D)3,000; 0

Question

Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.  Suppose Quick Buck and Pushy Sales decide to collude and work together as a monopolist with each firm producing half the quantity demanded by the market at the monopoly price. If Quick Buck cheats by reducing its price to $1 while Pushy Sales continues to comply with the collusive agreement, then Quick Buck will sell ________ units and Pushy Sales will sell ________ units.
A)0; 3,000 
B)3,000; 1,000 
C)2,000; 1,000 
D)3,000; 0

Quizplus · Accepted Answer

When price is $1, there are 3,000 units sold.  No consumers will be willing to pay $2 when they can buy the product from Quick Buck for $1.

Quick Buck and Pushy Sales Produce and Sell Identical Products