Figure 8.8
-Figure 8.8 shows demand, marginal revenue, and costs of a duopolist. Suppose that the two duopolists have the same costs. If the two firms form a cartel and charge the profit maximizing monopoly price, compared to perfect competition, the market price will be ________ and the total output level will be ________.

Question

Quizplus · Accepted Answer

When firms form a cartel, they act like a monopoly, setting higher prices and producing less output compared to a perfectly competitive market.

Figure 8.8 -Figure 8.8 Shows Demand, Marginal Revenue, and Costs of a of a Duopolist