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Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function:
Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P=200QAQB where QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCA=1,500+55QA+QA2 TCB=1,200+20QB+2QB2 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at $ . Similarly, Company B will produce units and sell at $ . At the optimum output levels, Company A earns
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