Homework (Ch 12) 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 total profits of $ and Company B earns total profits of $ Therefor total industry profits are $ At the optimum output levels, the marginal cost of Company A is $ and the marginal cost of Company B is $ The following table shows the long-run equilibrium if the firms act independently, as in the Cournot model (i.e., each firm assumes that the other firm's output will not change). Cournot Equilibrium Price Output Profits ($) (units) ($)