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:

-An agreement between Nextflix and Flixbuster to each supply 250 subscriptions is an example of
A) price discrimination.
B) Bertrand competition.
C) price leadership.
D) collusion.
E) increasing marginal costs.

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:
 
-An agreement between Nextflix and Flixbuster to each supply 250 subscriptions is an example of
A) price discrimination. 
B) Bertrand competition. 
C) price leadership. 
D) collusion. 
E) increasing marginal costs.

Quizplus · Accepted Answer

An agreement between Netflix and Flixbuster to each supply 250 subscriptions is an example of collusion, where two or more firms agree on prices or output levels, which is against competitive market principles.

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