Question

Loeconomics Spring 2019 Two producers of high grade ink for fountain pens have conspired and colluded to ort joint profit maximizing cartel. Their market demand and costs are as follows: Price Qty $2.75 14 $2.50 18 $2.25 $2 26 $1.75 30 $1.50 34 $1.25 38 Firm: North America 12 10 aty 6.045 7.045 4.675.295 4.115 $3.710 TC Firm: Asia 17 16 15 14 13 12 qty 14.125 14875 $12.845 12.540 12.945 13.500 TC 20 What are the quantity and the price of their product?whot will joint cartel profts be a. P-$1.75:Q-30 a. 999.99 p 104. 9 с 52.50 d 3a. 58 c. P $2.25; Q-22 d. P-$2.50; Q-18 e. None of the above 13

Answer 1

20

North America

Qty	TC	Marginal Cost
7	3.710	0
8	4.115	0.405
9	4.67	0.555
10	5.295	0.625
11	6.045	0.75
12	7.045	1

Asia

Qty	TC	Marginal Cost
12	12.845	0
13	12.540	-0.305
14	12.945	0.405
15	13.500	0.555
16	14.125	0.625
17	14.875	0.75

When The Two Producers Collude they will produce 26 units as there Marginal Cost is same which is equal to $0.625

So P= $2 and Q = 26 units

answer is b

19

Profit = Total Revenue - Total Cost

Profit = 2*26 - 14.125-5.295

Profit = 52-19.420 = $32.58

Answer D