Multiple Choice
There are two firms in the blastopheme industry.The demand curve for blastophemes is given by p = 1,500 - 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 each firm produces 150 units in its plant.
B) they produce a total of 300 units, no matter which firm produces them.
C) they produce a total of 250 units, no matter which firm produces them.
D) and only if they each produce a total of 375 units.
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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