Firms A and B operate as a centralized cartel. Their marginal cost functions
Question # 00520344
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Updated on: 05/01/2017 02:48 AM Due on: 05/01/2017
Firms A and B operate as a centralized cartel. Their marginal cost functions are defined below:
MCA= 2000 + 25QA
MCB= 2000 + 6.25QB
The firms face the following market demand curve:
Q= 1000 – 0.05P
Determine the market price that the firms should charge and the quantity of output that should be produced by each firm.
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Solution: Firms A and B operate as a centralized cartel. Their marginal cost functions