In a collusive oligopoly, joint profits are maximized when the price of a good is based on the:

Question

Quizplus · Accepted Answer

In a collusive oligopoly, the firms involved cooperate to fix prices and maximize their joint profits. In order to do so, they need to consider the market demand schedule, which reflects the demand for their product at different prices, and the marginal cost schedules of all the oligopolists, which reflect the additional cost of producing one more unit of the good. By setting a price where the market demand intersects with the joint marginal cost curve, the oligopolists can ensure that they maximize their profits together. Therefore, option B is the correct answer.

In a Collusive Oligopoly, Joint Profits Are Maximized When the Price