Cartel Pricing. The optical fiber manufacturing industry is highly concentrated with only three active firms. Annual output and the marginal cost of production for each company are as follows:

Competition from lower-priced imports has been effectively limited by import tariffs (taxes). Given this import protection, domestic firms are able to sell as much output as they wish at the current wholesale market price of $2,000. However, industry prices haven't risen above $2,000 because this price triggers a flood of foreign competition.

Question

Cartel Pricing. The optical fiber manufacturing industry is highly concentrated with only three active firms. Annual output and the marginal cost of production for each company are as follows:
 
Competition from lower-priced imports has been effectively limited by import tariffs (taxes). Given this import protection, domestic firms are able to sell as much output as they wish at the current wholesale market price of $2,000. However, industry prices haven't risen above $2,000 because this price triggers a flood of foreign competition.

Quizplus · Accepted Answer

The Answer of Cartel Pricing. The optical fiber manufacturing industry is highly concentrated with only three active firms. Annual output and the marginal cost of production for each company are as follows:
 
Competition from lower-priced imports has been effectively limited by import tariffs (taxes). Given this import protection, domestic firms are able to sell as much output as they wish at the current wholesale market price of $2,000. However, industry prices haven't risen above $2,000 because this price triggers a flood of foreign competition.