Firms A and B operate as a centralized cartel. Their marginal cost functions are defined below:
$$M C _ { A } = 2000 + 25 Q _ { \mathrm { A } } \quad M C _ { \mathrm { B } } = 2000 + 6.25 Q _ { \mathrm { B } }$$ The firms face the following market demand curve:
$$Q = 1000 - 0.05 P$$ Determine the market price that the firms should charge and the quantity of output that should be produced by each firm.

Question

Firms A and B operate as a centralized cartel. Their marginal cost functions are defined below:
 $$M C _ { A } = 2000 + 25 Q _ { \mathrm { A } } \quad M C _ { \mathrm { B } } = 2000 + 6.25 Q _ { \mathrm { B } }$$ The firms face the following market demand curve:
 $$Q = 1000 - 0.05 P$$ Determine the market price that the firms should charge and the quantity of output that should be produced by each firm.

Quizplus · Accepted Answer

The Answer of Firms A and B operate as a centralized cartel. Their marginal cost functions are defined below:
 $$M C _ { A } = 2000 + 25 Q _ { \mathrm { A } } \quad M C _ { \mathrm { B } } = 2000 + 6.25 Q _ { \mathrm { B } }$$ The firms face the following market demand curve:
 $$Q = 1000 - 0.05 P$$ Determine the market price that the firms should charge and the quantity of output that should be produced by each firm.

Firms a and B Operate as a Centralized Cartel MCA=2000+25QAMCB=2000+6.25QBM C _ { A } = 2000 + 25 Q _ { \mathrm { A } } \quad M C _ { \mathrm { B } } = 2000 + 6.25 Q _ { \mathrm { B } }MCA​=2000+25QA​MCB​=2000+6.25QB​

Firms a and B Operate as a Centralized Cartel $M C _ { A } = 2000 + 25 Q _ { \mathrm { A } } \quad M C _ { \mathrm { B } } = 2000 + 6.25 Q _ { \mathrm { B } }$