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Suppose That There Are Just Two Firms in a Small

Question 54

Multiple Choice

Suppose that there are just two firms in a small market.
Acme Manufacturing's Total Costs equal $100 + $3 × Quantity.
Generic Industries' Total Costs equal $500 + $3 × Quantity.
Refer to the information given above.Suppose that Acme and Generic face the same demand function,that they are both pursuing a profit-maximization policy,and that both companies are earning positive economic profits at that quantity.Which statement is true?


A) Acme will produce more output than Generic.
B) Generic will produce more output than Acme.
C) Acme and Generic will produce the same quantity and will have the same profits.
D) Acme and Generic will produce the same quantity,but Acme will have higher profits.

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