Problem
Two firms in a particular industry face a market demand curve given by the equation P = 100-(1/3)Q. The marginal cost is $40 per unit and the marginal revenue is MR = 100- (2/3)Q.
(a) Draw the demand curve to scale on a diagram, and then insert the corresponding marginal revenue curve and the MC curve.
(b) If these firms got together to form a cartel, what output would they produce and what price would they charge?
(c) Assuming they each produce half of the total what is their individual profit?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.