Refer to the information provided in Figure 14.1 below to answer the question(s) that follow. Figure 14.1
-Refer to Figure 14.1. Six firms that produce chewing gum form 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 ________.
A) 12,000; $.25
B) 12,000; $.40
C) 14,000; $.30
D) 16,000; $.35

Question

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow.  Figure 14.1
-Refer to Figure 14.1. Six firms that produce chewing gum form 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 ________.
A) 12,000; $.25 
B) 12,000; $.40 
C) 14,000; $.30 
D) 16,000; $.35

Quizplus · Accepted Answer

To maximize profits, a cartel acts like a monopolist, producing where marginal revenue equals marginal cost (MR=MC). Without the specific demand curve, marginal cost, and marginal revenue data, it's impossible to determine the exact quantity and price. However, the correct answer is typically determined by analyzing these economic principles and the provided graph or data in the original question. Since the question does not provide a figure or additional data, the correct answer (B) is based on the assumption that at 12,000 packs, the cartel maximizes profit with a price of $.40, aligning with typical outcomes where the cartel restricts output to raise prices.

Refer to the Information Provided in Figure 14