Order the answer to: Firms A and B make up a cartel that monopolizes

Assignment Help business-economics Order the answer to: Firms A and B make up a cartel that monopolizes

business-economics

Order the answer to: Firms A and B make up a cartel that monopolizes

Question Firms A and B make up a cartel that monopolizes the market for a scarce natural resource. The firms’ marginal costs are MCA = 6 + 2QA and MCB = 18 + QB, respectively. The firms seek to maximize the cartel’s total profit. a. The firms have decided to limit their total output to Q = 18. What outputs should the firms produce to achieve this level of output at minimum total cost? What is each firm’s marginal cost? b. The market demand curve is P = 86 – Q, where Q is the total output of the cartel. Show that the cartel can increase its profit by expanding its total output. (Compare MR to MC at Q = 18.) c. Find the cartel’s optimal outputs and optimal price. (At the optimum, MR = MCA = MCB.)
Subject business-economics
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