Refer to the graph of market demand and marginal revenue. Two firms have formed a centralized cartel in order to maximize profit on the market. Their marginal cost curves are given below

In order to maximize profit, the firms should produce Q1 = 3, Q2 = 1, and charge P= 60. How do I solve this?

Transcribed Image Text:

100 90 80 70 60 50 40 30 20 10 0 Price 1 2 3 4 5 6 7 8 9 10 11 Demand Quantity MC₁ = 10Q₁ and MC₂ = 30Q₂ 100 90 80 70 60 50 40 30 20 10 0 Price 1 2 3 4 5 6 7 8 9 10 11 Demand Quantity MC₁ = 10Q₁ and MC₂ = 30Q₂

Answer rating: 100% (QA)

Cartel would produce using the lower marginal cost to maximiz... View the full answer