There Are Only Two Firms in an Industry with Demand

question 89

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 20 units and sells them at a price of 10 so that each firm makes zero economic profits.If they formed a cartel and split the production of the output evenly,the profit-maximizing quantity produced by each firm is

• A) 5.
• B) 10.
• C) 15.
• D) 20.

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