Use the following to answer question(s): Collusion

-(Exhibit: Collusion) Panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms.Panels (a) and (b) give marginal cost curves for two of those firms.The price charged by the industry under collusion is given by:
A) W.
B) X.
C) Y.
D) Z.

Question

Use the following to answer question(s): Collusion
 
-(Exhibit: Collusion) Panel (c) gives the combined marginal revenue, demand, and marginal cost curves for an industry containing several firms.Panels (a) and (b) give marginal cost curves for two of those firms.The price charged by the industry under collusion is given by:
A) W. 
B) X. 
C) Y. 
D) Z.

Quizplus · Accepted Answer

The price charged by the industry under collusion is the price that maximizes the industry's total profit. This occurs when the industry's marginal revenue equals its marginal cost. In this case, the industry's marginal revenue curve is given by the curve labeled "MR" in panel (c). The industry's marginal cost curve is given by the curve labeled "MC" in panel (c). The price that maximizes the industry's total profit is the price at which the MR curve intersects the MC curve. This price is given by the point labeled "W" in panel (c).

Use the Following to Answer Question(s): Collusion