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Cheating firm produce to maximize profits

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A two firm cartel that produces at a constant marginal cost of $20 faces a market inverse demand curve of P=100-.50Q. Initially, both firms agree to produce half of the monopoly quantity, each producing 40 units of output. If one of the firms cheats on the agreement (assuming the other firm is compliant and continues to produce at 40 units), how much output should the cheating firm produce to maximize profits?

Reference no: EM132243857

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