Quick Buck and Pushy Sales produce and sell identica marginal and average cost. Below is the market demand and marginal revenue curves for the product. $4.00 $2.00 $1.00 MR 1000 D 4000 Q 2000 Quick Buck and Pushy Sales have agreed to each produce half the profit-maximizing monopolist quantity, set the monopoly price and split the profits evenly. Suppose
Quick Buck and Pushy Sales produce and sell identica marginal and average cost. Below is the market demand and marginal revenue curves for the product. $4.00 $2.00 $1.00 MR 1000 D 4000 Q 2000 Quick Buck and Pushy Sales have agreed to each produce half the profit-maximizing monopolist quantity, set the monopoly price and split the profits evenly. Suppose
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.1P
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Question
![2. Quick Buck and Pushy Sales produce and sell identical products and face zero
marginal and average cost. Below is the market demand and marginal revenue
curves for the product.
$4.00
$2.00
$1.00
MR
3000
D
4000
Q
2000
Quick Buck and Pushy Sales have agreed to each produce half the profit-maximizing
monopolist quantity, set the monopoly price and split the profits evenly. Suppose
Quick Buck can cheat on Pushy Sales and reduces its price to $1.00 each while Pushy
Sales continues to comply with the collusive agreement.
a. Find the economic profit for both firms if they cooperate and charge the same
price.
b. Find the economic profit for both firms if Quick Buck breaks the agreement and
charges a lower price.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc8acadad-ca89-4976-80a4-d88a4ec2b72c%2F7be99c01-af95-4da5-8294-696981a4c9f2%2Fwxcm7u_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Quick Buck and Pushy Sales produce and sell identical products and face zero
marginal and average cost. Below is the market demand and marginal revenue
curves for the product.
$4.00
$2.00
$1.00
MR
3000
D
4000
Q
2000
Quick Buck and Pushy Sales have agreed to each produce half the profit-maximizing
monopolist quantity, set the monopoly price and split the profits evenly. Suppose
Quick Buck can cheat on Pushy Sales and reduces its price to $1.00 each while Pushy
Sales continues to comply with the collusive agreement.
a. Find the economic profit for both firms if they cooperate and charge the same
price.
b. Find the economic profit for both firms if Quick Buck breaks the agreement and
charges a lower price.
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