Multiple Choice
There are two firms in the blastopheme industry.The demand curve for blastophemes is given by p = 3,000 - 2q.Each firm has one manufacturing plant and each firm i has a cost function C(qi) = q2i, where qi is the output of firm i.The two firms form a cartel and arrange to split total industry profits equally.Under this cartel arrangement, they will maximize joint profits if
A) and only if they each produce a total of 750 units.
B) they produce a total of 500 units, no matter which firm produces them.
C) and only if each firm produces 300 units in its plant.
D) they produce a total of 600 units, no matter which firm produces them.
E) they shut down one of the two plants, having the other operate as a monopoly and splitting the profits.
Correct Answer:
Verified
Correct Answer:
Verified
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