Scenario: Suppose There Are Only Two Firms in an Industry

Multiple Choice

Scenario: Suppose there are only two firms in an industry, and their products are perfect substitutes for each other. Each firm had a fixed marginal cost of $5 and zero fixed cost of operation. The highest the consumers of this product are willing to pay for it is $10, and there are 200 consumers in this market.
-Refer to the scenario above.Suppose Firm 1 announces that it will charge $10 for its product.Then the optimal decision of Firm 2 will be to charge ________,and Firm 2 will then get ________ of the market share.

A) $9.99; 100 percent
B) $10; 50 percent
C) $5; 100 percent
D) $5; 50 percent