Gotcha, the Only Seller of Stun Guns, Faces the Inverse

question 128

Multiple Choice

Gotcha, the only seller of stun guns, faces the inverse market demand curve P = 400 - 12Q, where Q measures the number of stun guns per day and P is the price per stun gun. The marginal cost is constant at $64. Suppose a new firm, Ouchy, enters the stun gun market. Ouchy's marginal cost is also constant at $64. Gotcha and Ouchy agree to form a cartel and evenly split the market output. In this case, Gotcha's output level is ____.

• A) 14
• B) 11
• C) 9
• D) 7

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