The following table shows a small community's demand for monthly subscriptions to a streaming movie service.Assume that only two firms (Nextflix and Flixbuster)sell in this market,that each firm offers the same quality of service and movie selection,and that each firm's marginal cost is constant and equal to 0 (zero)due to excess capacity.Use this information to answer the following questions:

-If the two firms operating in this market agreed to each supply one-half of the quantity a monopolist would supply,the contract would specify that
A) Nextflix supplies 400 subscriptions and Flixbuster supplies 100 subscriptions.
B) Flixbuster supplies 400 subscriptions and Nextflix supplies 100 subscriptions.
C) Nextflix supplies 0 (zero)subscriptions and Flixbuster supplies 500 subscriptions.
D) Flixbuster supplies 0 (zero)subscriptions and Nextflix supplies 500 subscriptions.
E) Nextflix supplies 250 subscriptions and Nextflix supplies 250 subscriptions.

Question

The following table shows a small community's demand for monthly subscriptions to a streaming movie service.Assume that only two firms (Nextflix and Flixbuster)sell in this market,that each firm offers the same quality of service and movie selection,and that each firm's marginal cost is constant and equal to 0 (zero)due to excess capacity.Use this information to answer the following questions:
 
-If the two firms operating in this market agreed to each supply one-half of the quantity a monopolist would supply,the contract would specify that
A) Nextflix supplies 400 subscriptions and Flixbuster supplies 100 subscriptions. 
B) Flixbuster supplies 400 subscriptions and Nextflix supplies 100 subscriptions. 
C) Nextflix supplies 0 (zero)subscriptions and Flixbuster supplies 500 subscriptions. 
D) Flixbuster supplies 0 (zero)subscriptions and Nextflix supplies 500 subscriptions. 
E) Nextflix supplies 250 subscriptions and Nextflix supplies 250 subscriptions.

Quizplus · Accepted Answer

To find the quantity a monopolist would supply, we need to add the quantities demanded at each price level, which gives us a total quantity of 500 subscriptions. If the two firms each supply one-half of this quantity, they would each supply 250 subscriptions, which is option E. The other options either give one firm more than half the quantity or none of the quantity, which would not be profitable for both firms.

The Following Table Shows a Small Community's Demand for Monthly