Table 15P-1 shows the monthly demand schedule for a good in a duopoly market. The two producers in this market each faces $5,000 of fixed costs per month. There are no marginal costs.

a. What is the monthly profit for each duopolist if they evenly split the quantity a monopolist would produce?

b. Suppose duopolist A decides to increase production by 200 units. How much will each duopolist produce and what price will they charge? How much profit will each duopolist earn?

Table 15P-1:

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Price Total revenue Marginal revenue ($) Quantity ($) ($) 40 200 35 7,000 35 400 30 12,000 25 600 25 15,000 15 16,000 800 20 5 1,000 15 15,000 -5 1,200 10 12,000 - 15 1,400 7,000 -25 1,600 -35 5.