Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Firm A and B make up a cartel that monopolizes the market for a scarce natural resource. The firms marginal costs are MCa=6+2Qa and MCb=18=Qb.

Firm A and B make up a cartel that monopolizes the market for a scarce natural resource. The firms marginal costs are MCa=6+2Qa and MCb=18=Qb. The firms seek to maximize the cartels total profit. a) the firm have decided to limit their total output to Q+ 18. What output should firm produce to archieve this level of output a minimum total cost? What is each firms marginal cost? B) The market demand curve is P= 86-Q where Q is the total output of the cartel. Show that the cartel can increase its profits by expanding its total output.( hint compare MR to MC at Q=18) c) Find the cartel optimal output and optimal price. ( hint : At the optimum, MR= MCa=MCb)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

How is slaked lime powder prepared ?

Answered: 1 week ago

Question

Why does electric current flow through acid?

Answered: 1 week ago

Question

What is Taxonomy ?

Answered: 1 week ago

Question

1. In taxonomy which are the factors to be studied ?

Answered: 1 week ago