Firm A and Firm B both produce the same product with the following total costs (TC): Consider the situation in which the market price is $15 and each of the two firms produces 2 units.
(A)Is the situation Pareto efficient? Explain. (
B)Suggest one different production allocation for the two firms that allows the 4 units of total output to be produced at a lower overall total cost. (
C)Would the outcome of your suggested production allocation maximize firm profits?

Question

Firm A and Firm B both produce the same product with the following total costs (TC):  Consider the situation in which the market price is $15 and each of the two firms produces 2 units.
(A)Is the situation Pareto efficient? Explain. (
B)Suggest one different production allocation for the two firms that allows the 4 units of total output to be produced at a lower overall total cost. (
C)Would the outcome of your suggested production allocation maximize firm profits?

Quizplus · Accepted Answer

The Answer of Firm A and Firm B both produce the same product with the following total costs (TC):  Consider the situation in which the market price is $15 and each of the two firms produces 2 units.
(A)Is the situation Pareto efficient? Explain. (
B)Suggest one different production allocation for the two firms that allows the 4 units of total output to be produced at a lower overall total cost. (
C)Would the outcome of your suggested production allocation maximize firm profits?

Firm a and Firm B Both Produce the Same Product