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Consider two firms that are the sole producers of mineral water in a market. Suppose the market demand is given by Q = 24 -
Consider two firms that are the sole producers of mineral water in a market. Suppose the market demand is given by Q = 24 - p, and each firm can produce mineral water from its own spring at zero marginal and average cost.
a. If the two firms are considering a collusive agreement under which each produces half the monopoly output and offers it for sale at the monopoly price. Find each firm's economic profit in this case. (10 points)
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