[20] Consider a market with two firms, A and B. Firm A's marginal cost is: MC, = 100 + ¼q»• while firm B's marginal cost is: MC, = 80 + 2qp. Striking up a cartel agreement, these firms collectively decide to produce 200 units (i.e., 200 = q, + qµ). Wishing to maximize their joint (cartel) profit, quotas should be set such that A produces less than B. A. True В. False [21] Continuing question (20), if firm A sticks to its quota level of output, firm B will wish to produce А. more than its quota level of output. less than its quota level of output. its quota level of output. all of the above are possible. В. C. D.
[20] Consider a market with two firms, A and B. Firm A's marginal cost is: MC, = 100 + ¼q»• while firm B's marginal cost is: MC, = 80 + 2qp. Striking up a cartel agreement, these firms collectively decide to produce 200 units (i.e., 200 = q, + qµ). Wishing to maximize their joint (cartel) profit, quotas should be set such that A produces less than B. A. True В. False [21] Continuing question (20), if firm A sticks to its quota level of output, firm B will wish to produce А. more than its quota level of output. less than its quota level of output. its quota level of output. all of the above are possible. В. C. D.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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