What is profit maximizing or loss minimizing output level

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Reference no: EM133346996

Question: A two firm cartel is formed producing an industrial good. The duopoly cartel faces the following demand curve:

Qd = 400 - 20*P

P = 20 - 0.05*Q

MR = 20 - 0.1*Q

The MC and ATC of each firm takes the following form:

Firm 1: MC1 = 8 + 0.4*Q1 and ATC1 = 8 + 0.2*Q1

Firm 2: MC2 = 4 + 0.4*Q2 and ATC2 = 4 + 0.2*Q2

a. What is the profit maximizing/loss minimizing output level, Q, for the cartel?

b. What is the corresponding price for the output, Q?

c. What is the individual output for each firm 1 and firm 2?

d. What is the individual total profit for each firm 1 and firm 2?

e. What is the cartel's total profit?

Reference no: EM133346996

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