Cartel to maximize total industry profits

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Reference no: EM137648

Q. Two companies (A as well as B) are duopolists that produce identical products. Demand as well as for the products is given by the following demand as well as function:

QB QA P = 10,000
where QA as well as QB are the quantities sold by the respective firms as well as P is the selling cost.
Total cost functions for the two companies are:
TCA = 500,000 + 200QA + .5QA2
TCB = 200,000 + 400QB + QB2
Assume that the firms form a cartel to maximize total industry profits (sum of firm A as well as firm B profits). Determine the optimum output as well as selling cost for each firm.

Reference no: EM137648

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