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 with each firm producing half the quantity demanded by the market at the monopoly price, then what will be Quick Buck's economic profit?
A)$1,000
B)$2,000
C)$3,000
D)$4,000

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 with each firm producing half the quantity demanded by the market at the monopoly price, then what will be Quick Buck's economic profit?
A)$1,000 
B)$2,000 
C)$3,000 
D)$4,000

Quizplus · Accepted Answer

Each firm produces 1,000 and earns $2 profit on each unit because average cost is zero.

Quick Buck and Pushy Sales Produce and Sell Identical Products