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 quantity of output produced by Firm 2 under collusion is given by:
A) H.
B) J.
C) K.
D) L.

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 quantity of output produced by Firm 2 under collusion is given by:
A) H. 
B) J. 
C) K. 
D) L.

Quizplus · Accepted Answer

Under collusion, firms act together to maximize total profits as if they were a single firm. The combined marginal revenue curve intersects the combined marginal cost curve at point J in the exhibit. This point determines the total quantity of output for the industry under collusion. Since the question asks for the quantity of output produced by Firm 2, and Firm 2's marginal cost curve intersects the industry's marginal cost curve at point J, it indicates that Firm 2 would produce up to point J under collusion.

Use the Following to Answer Question(s): Collusion