Price-output if managers set price equal to marginal cost

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The can industry is composed of two firms. Suppose that the demand curve for cans is P=100-Q where P is the price (in cents) of a can and Q is the quantity demanded (in millions per month) of cans. Suppose the total cost function of each firm is TC=2+15Q where TC is total cost (in tens of thousands of dollars) per month and Q is the quantity produced (in millions) per month by the firm.

a) What are the price and output if managers set price equal to marginal cost?

b) What are the profit - maximizing price and output if the managers - collide and act like a monopolist?

c) Do the managers make a higher combined profit if they collide than if they set price equal to marginal cost? If so, how much higher is their combined profit?

Reference no: EM13984413

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