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Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.Firms in the duopoly industry illustrated in the figure have zero fixed costs.The market demand curve is D₂.If the two firms colluded to maximize their combined economic profits,they would set the market price at _____,and combined economic profits of the firms would be _____.

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Figure: Monopoly Profits in Duopoly

-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.Firms in the duopoly industry illustrated in the figure have zero fixed costs.The market demand curve is D₂.If the two firms colluded to maximize their combined economic profits,they would set the market price at _____,and combined economic profits of the firms would be _____.

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According to the figure, the intersection of the marginal cost curve with the market demand curve is at point E, which corresponds to a price of P₂. At this price, the output level for each firm is 8 units and the economic profit for each firm is P₁. Therefore, the combined economic profit for the two firms is given by the area of the rectangle P₁P₂BG.

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