Refer to the information provided in Figure 14.7 below to answer the questions that follow. Figure 14.7
-Refer to Figure 14.7. Six chewing gum producing firms form a cartel. The firms have identical cost structures. If the cartel produces the profit maximizing output level, each firm should produce

Question

Refer to the information provided in Figure 14.7 below to answer the questions that follow.  Figure 14.7
-Refer to Figure 14.7. Six chewing gum producing firms form a cartel. The firms have identical cost structures. If the cartel produces the profit maximizing output level, each firm should produce

Quizplus · Accepted Answer

The profit-maximizing output level for a cartel is where the marginal cost (MC) curve intersects the marginal revenue (MR) curve. In Figure 14.7, this occurs at an output level of 12,000 packs of chewing gum. Since the firms have identical cost structures, each firm should produce 12,000 / 6 = 2,000 packs of chewing gum.

Refer to the Information Provided in Figure 14