Use the Following to Answer Questions

Multiple Choice

Use the following to answer questions:
Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Oligopoly) Firms in the duopoly industry illustrated in the figure Monopoly Profits in Duopoly have zero fixed costs. The market demand curve is D₂. If the two firms colluded to maximize their combined economic profits, they would set the market price at _____, and combined economic profits of the firms would be _____.

A) P₁; given by the area of the rectangle 0P₁CQ₄
B) P₁; zero
C) P₃; given by the area of the rectangle 0P₃AQ₁
D) P₂; given by the area of the rectangle P₁P₂BG