5. A two-equal-size-firm cartel faces demand function Q = 20 - 2Pand each firm faces marginal cost function MC = 2Q. Derive (a) the MR function of the cartel and (b) the MC function for the entire cartel (i.e., EMC).

5. A two-equal-size-firm cartel faces demand function Q = 20 - 2Pand each firm faces marginal cost function MC = 2Q. Derive (a) the MR function of the cartel and (b) the MC function for the entire cartel (i.e., EMC).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

5. A two-equal-size-firm cartel faces demand function Q- 20 - 2Pand each firm faces marginal cost
function MC = 2Q. Derive (a) the MR function of the cartel and (b) the MC function for the entire
cartel (i.e., EMC).

6. Find the algebraic solution to Problem 5 above (9 text page 455) (ie., determine the equilibrium Q
and P for the cartel).

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P1
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