There Are Only Two Firms in an Industry with Demand

question 125

Multiple Choice

There are only two firms in an industry with demand curves q₁ = 30 - P and q₂ = 30 - P.Both have no fixed costs and each has a marginal cost of 10 per unit produced.If they behave as profit-maximizing price takers,each produces 10 units and sells them at a price of 10 so that each firm makes zero economic profits.If they form a cartel,their inverse demand curve is

• A) Q = 30 - P.
• B) Q = 60 - 2P.
• C) P = 60 - 2Q.
• D) P = 30 - Q/2.

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