If duopolists can enforce an agreement, to produce collectively the monopoly output and split the market between the two firms, then the sum of their output will be:
A)be less than the monopoly quantity
B)be greater than the monopoly quantity
C)be equal to the monopoly quantity
D)any of the above are possible

Question

Quizplus · Accepted Answer

If the duopolists can successfully collude and agree to produce monopoly output and divide the market evenly between them, then their combined output will be equal to the monopoly output. This is because the monopoly output is the level at which marginal revenue equals marginal cost, and with only two firms in the market, the sum of their marginal costs will be equal to the market supply curve. Therefore, the duopolists' combined output will also be equal to the monopoly output.

If Duopolists Can Enforce an Agreement, to Produce Collectively the Monopoly