Consider a duopolistic market with an inverse demand curve P(Q) = 460 − 4Q and constant marginal costs for each firm that are given by MC(Q) = 10. Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces 37.5 units and the prevailing market price is 160. How would the joint profits of these two firms change if they s
Consider a duopolistic market with an inverse demand curve P(Q) = 460 − 4Q and constant marginal costs for each firm that are given by MC(Q) = 10. Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces 37.5 units and the prevailing market price is 160. How would the joint profits of these two firms change if they s
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.4P
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Consider a duopolistic market with an inverse demand curve P(Q) = 460 − 4Q
and constant marginal costs for each firm that are given by MC(Q) = 10.
Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces
and constant marginal costs for each firm that are given by MC(Q) = 10.
Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces
37.5 units and the prevailing market price is 160.
How would the joint profits of these two firms change if they successfully formed a cartel?
Change in joint profits: ?
(Enter your answer rounded to two decimal places; include a negative sign if appropriate.)
(Enter your answer rounded to two decimal places; include a negative sign if appropriate.)
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