(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If firm 1 decides to cheat and increase production by 10 more barrels and firm 2 continues to produce 40 barrels, firm 2 will earn profits of:
A)$6,400.
B)$6,300.
C)$3,500.
D)$2,800.

Question

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If firm 1 cheats and increases production by 10 barrels, the total production becomes 50 barrels. Assuming the price per barrel decreases as total production increases, firm 2's profit will decrease. Given the options, $2,800 is the most plausible reduced profit for firm 2.

(Table: Demand for Crude Oil) Look at the Table Demand