Duopolists a and B Face the Following Demand Curves: Q_A

question 22

Multiple Choice

Duopolists A and B face the following demand curves: Q_A = 120 - 2P_A + P_B and Q_B = 120 - 2P_B + P_A.If both firms have zero marginal cost and they form a cartel,what is the profit-maximizing price and quantity?

• A) P = 30, Q = 180.
• B) P = 40, Q = 160.
• C) P = 60, Q = 120.
• D) P = 80, Q = 80.
• E) P = 75, Q = 90.

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Definitions:

Maximum Amounts

The highest allowable quantities or levels for inventory, budgets, or resources within a specific context to prevent overallocation or waste.

Slack

The amount of time a task in a project can be delayed without causing a delay to subsequent tasks or the overall project timeline.

Profit Margins

The difference between the sales revenue of a product or service and its cost, expressed as a percentage of the sales revenue.