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Scenario: Two Identical Firms
Two identical firms make up an industry in which the market demand curve is represented by Q = 5,000 - 4P, where Q is the quantity demanded and P is price per unit. The marginal cost of producing the good in this industry is constant and equal to $650. Fixed cost is zero.
-(Scenario: Two Identical Firms) When the firms in the scenario Two Identical Firms collude and produce the profit-maximizing output, what is the profit earned by each firm?
A) $360,000
B) $180,000
C) $15,000
D) $25,000
Correct Answer:
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