-(Exhibit: Monopoly Through Collusion) Given the duopoly industry illustrated in the exhibit, if the two firms colluded to maximize their joint profits, the market price they would set would be _______ and each firm's economic profit would be _______ . A) P₂; given by the area of the rectangle bounded by P₁P₂EF = FEBG B) P₁; P₁P₃AF C) P₃; given by the area of the rectangle bounded by 0P₃AQ₁ D) P₂; given by the area of the rectangle bounded by P₁P₂BG

Question

Quizplus · Accepted Answer

The correct answer is A because the market price that maximizes joint profits is P2, and the economic profit for each firm is given by the area of the rectangle bounded by P1P2EF = FEBG.

-(Exhibit: Monopoly Through Collusion) Given the Duopoly Industry Illustrated in the Exhibit