Suppose Acme and Mega produce and sell identical product with zero marginal and average cost.Following is the market demand and marginal revenue curves for the product.
Refer to the figure above.Suppose Mega and Acme have colluded to work as a pure monopolist,but Mega cheats on Acme and reduces its price to $1.00 each.Mega would then sell ____ units and Acme would sell _____ units.
A) 150;50
B) 100;50
C) 150;0
D) 100;0

Question

Suppose Acme and Mega produce and sell identical product with zero marginal and average cost.Following is the market demand and marginal revenue curves for the product. 
Refer to the figure above.Suppose Mega and Acme have colluded to work as a pure monopolist,but Mega cheats on Acme and reduces its price to $1.00 each.Mega would then sell ____ units and Acme would sell _____ units.
A) 150;50 
B) 100;50 
C) 150;0 
D) 100;0

Quizplus · Accepted Answer

At $1.00 Mega sells 150 units.No consumers are willing to pay Acme's price of $2.00.

Suppose Acme and Mega Produce and Sell Identical Product with Zero