Exhibit 7-1 -Refer to Exhibit 7-1. If It Is Somehow Determined in Somehow

Multiple Choice

Exhibit 7-1
-Refer to Exhibit 7-1. If it is somehow determined in the market that 5 units of the output should be produced, Firm A will produce 1 unit whereas Firm B will produce 4 because

A) neither firm knows what the other's costs are, making it impossible for them to coordinate their activities properly.
B) Firm B will undercut Firm A's price, willingly sacrificing short-term profit to eliminate the competition.
C) market planners will examine the data and conclude that it is efficient for the firms to share production in this way.
D) Firm A will not have as good a reputation as Firm B, which has been in business longer.
E) Firm A will not be able to produce a second unit and sell it at a lower price than Firm B is willing to do.