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Question 10

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Use the following to answer questions below : Use the following to answer questions below :   -Refer to the graph of market demand and marginal revenue. Two firms have formed a centralized cartel in order to maximize profit on the market. Their marginal cost curves are given below: MC<sub>1</sub> = 5Q<sub>1</sub> and MC<sub>2</sub> = 10Q<sub>2</sub> In order to maximize profit, the firms should produce A)  Q<sub>1</sub> = 4, Q<sub>2</sub> = 2, and charge P = 50. B)  Q<sub>1</sub> = 8, Q<sub>2</sub> = 0, and charge P = 40. C)  Q<sub>1</sub> = 3, Q<sub>2</sub> = 1, and charge P = 60. D)  None of the above is correct.
-Refer to the graph of market demand and marginal revenue. Two firms have formed a centralized cartel in order to maximize profit on the market. Their marginal cost curves are given below:
MC1 = 5Q1 and MC2 = 10Q2
In order to maximize profit, the firms should produce


A) Q1 = 4, Q2 = 2, and charge P = 50.
B) Q1 = 8, Q2 = 0, and charge P = 40.
C) Q1 = 3, Q2 = 1, and charge P = 60.
D) None of the above is correct.

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