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Firms A and B operate as a centralized cartel. Their marginal cost functions are defined below: MC A = 2000 + 25 Q A MC
Firms A and B operate as a centralized cartel. Their marginal cost functions are defined below:
MC A = 2000 + 25 Q A | MC B = 2000 + 6.25 Q B |
The firms face the following market demand curve:
Q = 1000 - 0.05 P |
Determine the market price that the firms should charge, the quantity of output that should be produced by each firm and the profits earned.
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