Three firms agree to operate as a monopoly and charge the monopoly price of $100 for their product and (jointly)produce the monopoly quantity of 20,000 units. If the competitive price for the product is $35, under the Clayton Act these three firms face treble damages of_______.
A)$1,000,000
B)$3,000,000
C)$3,900,000
D)$1,300,000

Question

Quizplus · Accepted Answer

The treble damages under the Clayton Act would be calculated based on the difference between the monopoly price and the competitive price, multiplied by the quantity, and then tripled. The difference in price is $100 - $35 = $65. Multiplied by the quantity of 20,000 units gives $1,300,000. Trebled, this amount is $1,300,000 * 3 = $3,900,000.

Three Firms Agree to Operate as a Monopoly and Charge