Assume That Demand for a Product That Is Produced at Zero

question 154

Essay

Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
a. What is the profit-maximizing level of production for a group of oligopolistic firms that operate as a cartel?
b. Assume that this market is characterized by a duopoly in which collusive agreements are illegal.
What market price and quantity will be associated with a Nash equilibrium?

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Definitions:

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