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: MC₁ = 10Q₁ and MC₂ = 30Q₂ 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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To maximize profit, the cartel should equate marginal revenue (MR) with the combined marginal cost (MC) of production. Given the marginal cost functions, the optimal production levels are Q₁ = 3 and Q₂ = 1, which results in a price of P = 60.

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