Suppose That Mystic Energy and E-Storm Are the Only Two

question 108

Essay

Suppose that Mystic Energy and E-Storm are the only two producers of hydrogen fuel cells. The market inverse demand curve for hydrogen fuel cells is P = 1,300 - 0.08Q, where Q is the number of fuels cells per month and P is the price per fuel cell. The marginal cost is constant at $500. Acting as a cartel, the owners of Mystic Energy and E-Storm agree to evenly split the market output.
a. How much output does each firm produce?
b. What is the market price per fuel cell?
c. If each firm has fixed costs of $250,000, what is each firm's profit?

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