Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product. If Quick Buck and Pushy Sales decide to collude and work together as a monopolist, then together they should produce ________ units per month and charge ________ per unit.
A)3,000; $1
B)4,000; $2
C)2,000; $2
D)1,000; $3

Question

Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. Below is the market demand curve for their product.  If Quick Buck and Pushy Sales decide to collude and work together as a monopolist, then together they should produce ________ units per month and charge ________ per unit.
A)3,000; $1 
B)4,000; $2 
C)2,000; $2 
D)1,000; $3

Quizplus · Accepted Answer

Given this demand curve, the MR curve has a vertical intercept of 4 and a horizontal intercept of 2,000. Thus, since marginal cost is zero, MC = MR when quantity is 2,000. The price on the demand curve that corresponds to this quantity is $2 per unit.

Quick Buck and Pushy Sales Produce and Sell Identical Products