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

Question

Quizplus · Accepted Answer

When two firms collude to maximize profit, they act like a monopoly, producing the quantity where industry marginal cost equals industry marginal revenue to maximize joint profits.

When Two Firms Collude to Maximize Profit the Total Quantity