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Figure: Demand 2 Two Firms in an Industry Act

Question 5

Multiple Choice

Figure: Demand 2 Figure: Demand 2 Two firms in an industry act as a cartel, with each firm agreeing to charge a price of $16 and sell two units of output. If one of them cheats and produces two more units of output, the cheating firm's total revenue increases by ______ and the other firm's total revenue decreases by ______. A) $24; $4 B) $28; $14 C) $84; $32 D) $12; $8 Two firms in an industry act as a cartel, with each firm agreeing to charge a price of $16 and sell two units of output. If one of them cheats and produces two more units of output, the cheating firm's total revenue increases by ______ and the other firm's total revenue decreases by ______.


A) $24; $4
B) $28; $14
C) $84; $32
D) $12; $8

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