Assignment for Unit 10 (Market Structure) A two firm cartel producing industrial diamonds faces the following demand function Q 120 10 P or P 12 0 1 Q The marginal cost and average total cost functions of each firm are, respectively, MC 1 4 0 2 Q 1 and ATC 1 4 0 1 Q 1 MC 2 4 0 2 Q 2 and ATC 2 4 0 1 Q 2 Draw a figure showing the best level of output and price for the cartel, and the output of each firm to minimize the total costs of production for the cartel (50 pts)

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Question: Assignment for Unit 10 (Market Structure) A two - firm cartel producing industrial diamonds faces the following demand function; Q = 120 - 10 P

Assignment for Unit 10 (Market Structure)

A two - firm cartel producing industrial diamonds faces the following demand function;

Q = 120 - 10PorP = 12 - 0.1Q

The marginal cost and average total cost functions of each firm are, respectively,

MC₁ = 4 + 0.2Q₁andATC₁ = 4 + 0.1Q₁

MC₂ = 4 + 0.2Q₂andATC₂ = 4 + 0.1Q₂

Draw a figure showing the best level of output and price for the cartel, and the output of each firm to minimize the total costs of production for the cartel.

(50 pts)

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