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-(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. 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 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. 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

If the industry output is 700, it exceeds the profit-maximizing output of 500, leading to a lower price and thus lower profits for each firm. Therefore, each firm's profits will be $200 less than they would be at the output of 500.

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