-Refer to Figure 12.1.Six firms that produce chewing gum have formed a cartel.The cartel faces the market demand curve given by D.To maximize profits,the cartel should produce ________ packs of chewing gum and the price should be ________.

Question

Quizplus · Accepted Answer

To maximize profits, a cartel acts like a monopolist, producing where marginal revenue equals marginal cost (MR=MC) to set the highest possible price consumers are willing to pay for that quantity. Without the specific demand, cost, or marginal revenue curves provided, the correct answer cannot be determined through calculation here. However, based on typical economic theory, the choice that suggests a lower quantity (12,000) and a higher price ($.40) compared to other options with the same quantity but lower price, aligns with monopolistic behavior aiming to maximize profits.