Only two firms, ABC and MNO, sell a particular product. The following table shows the demand curve fortheir product. Each firm has the same constant marginal cost of $4 and zero fixed cost.Quantity Demanded(Units)0510152025Price(Dollars per unit)14131211109876543210303540455055606570Total Revenue(Dollars)065120165200225240245240225200165120650Total Cost(Dollars)020406080100120140160180200220240260280Refer to the table above and explain:A). If ABC and MNO operate to jointly maximize profits, then what is the price? $9B). If ABC and MNO operate to jointly maximize profits, then what quantity is sold? 25IProfit(Dollars)0458010512012512010580450-55-120-195-280C). If ABC and MNO operate to jointly maximize profits and agree to share the profit equally, then howmuch profit will each of them earn? $62.5D). ABC and MNO agree to maximize joint profits. However, while ABC produces the agreed-upon amount,MNO breaks the agreement and produces 5 more than agreed. How much profit does MNO make? $120. E). ABC and MNO agree to jointly maximize profits. If ABC and MNO each break the agreement and eachproduce 5 more than agreed upon, how much less profit does each make, compared to the profit at the carteloutput?F). If this market were perfectly competitive instead of oligopolistic, what would the price be?G). If this market were perfectly competitive instead of oligopolistic, what quantity would be produced?

A duopoly is a type of oligopoly market in which two firms sell a product to a large number of…

Answered: E). ABC and MNO agree to jointly…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 1PA

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The market for apple pies in the city of Ectenia is competitive and has the followingdemand schedule:Price Quantity Demanded$ 1 1,200 pies2 1,1003 1,0004 9005 8006 7007 6008 5009 40010 30011 20012 10013 0 ch producer in the market has fixed costs of $9 and the following marginal cost:Quantity Marginal Cost1 pie $ 22 43 64 85 106 12a. Compute each producer’s total cost and average total cost for 1 to 6 pies.b. The price of a pie is now $11. How many pies are sold? How many pies does eachproducer make? How many producers are there? How much profit does eachproducer earn?c. Is the situation described in part (b) a long-run equilibrium? Why or why not?d. Suppose that in the long run there is free entry and exit. How much profit does eachproducer earn in the long-run equilibrium? What is the market price? How many piesdoes each producer make? How many pies are sold in the market? How many pieproducers are operating?
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Price L M N 0 K MC ATC MR F G Output The profit-maximizing firm will be earning total revenue of OFIN OFJM OFKL OGHM
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