When two firms collude to maximise profit the total quantity produced by both firms taken together is determined at the quantity where _______.
A) industry marginal cost equals industry marginal revenue
B) excess capacity is as large as possible
C) the price equals the industry's marginal cost
D) excess capacity is minimised

Question

Quizplus · Accepted Answer

When two firms collude to maximize profit, they act as a monopoly. The total quantity produced is determined at the point where the industry's marginal cost equals the industry's marginal revenue, as this is where profit is maximized.

When Two Firms Collude to Maximise Profit the Total Quantity