Two firms in a collusive duopoly that have an identical and constant MC will each produce:
A)one- half of the competitive output.
B)the competitive output.
C)the monopoly output.
D)one- half of the monopoly output.

Question

Quizplus · Accepted Answer

In a collusive duopoly, firms will aim to maximize their joint profits. This can be achieved by producing the monopoly output level, which is typically less than the competitive output level. Since both firms have identical and constant marginal costs, they will split the market equally, each producing one-half of the monopoly output level. Therefore, the correct answer is option D, as each firm will produce one-half of the monopoly output level.

Two Firms in a Collusive Duopoly That Have an Identical