Use the following to answer questions:
-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. Suppose that these two producers have formed a cartel and are maximizing total industry profits and splitting the production of output evenly between themselves. If Margaret decides to cheat on the agreement and sell 100 more gadgets, how many gadgets will she sell?
A) 0
B) 250
C) 350
D) 600

Question

Use the following to answer questions: 
-(Table: Demand Schedule for Gadgets) Look at the table Demand Schedule for Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets with no marginal cost or fixed cost. Suppose that these two producers have formed a cartel and are maximizing total industry profits and splitting the production of output evenly between themselves. If Margaret decides to cheat on the agreement and sell 100 more gadgets, how many gadgets will she sell?
A) 0 
B) 250 
C) 350 
D) 600

Quizplus · Accepted Answer

If Margaret cheats and sells 100 more gadgets, she will sell her original share plus the additional 100 gadgets. Assuming the cartel's total output was split evenly, she would sell half of the total output plus the extra 100 gadgets. If the original split was 250 each, she would sell 350 gadgets.

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