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-(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets with no marginal cost or fixed cost.If industry output is 700,each firm's profits will be _____ than they would be at the output of 500,which maximizes industry profit.
A)$150 less
B)$150 more
C)$200 more
D)$200 less

Question

Use the following to answer question: 
-(Table: Demand Schedule of Gadgets)Use Table: Demand Schedule of Gadgets.The market for gadgets consists of two producers,Margaret and Ray.Each firm can produce gadgets with no marginal cost or fixed cost.If industry output is 700,each firm's profits will be _____ than they would be at the output of 500,which maximizes industry profit.
A)$150 less 
B)$150 more 
C)$200 more 
D)$200 less

Quizplus · Accepted Answer

When industry output increases from the profit-maximizing level (500) to 700, it indicates overproduction relative to the demand schedule's profit-maximizing point. This overproduction leads to a decrease in price and, consequently, profits for each firm. The specific amount ($200 less) is determined by the change in total revenue and costs, but without marginal or fixed costs, the decrease in profit comes from reduced price and oversupply.

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