Question

If a certain market were a monopoly, then the monopolist would maximize its profit by producing 4,000 units of output. If, instead, that market were a duopoly, then which of the following outcomes would be most likely if the duopolists successfully collude?

a. Each duopolist produces 4,000 units of output.
b. Each duopolist produces 1,500 units of output.
c. One duopolist produces 2,400 units of output and the other produces 1,600 units of output.
d. One duopolist produces 3,000 units of output and the other produces 1,500 units of output.

Answer 1

A

Step-by-step explanation:

A monopoly is when there are two firms operating in an industry.

A duopoly is when there are two firms operating in an industry. When the two firms collude, they become a monopoly.

If a monopoly maximises profit by producing 4000 units, the colluding duopolist would also maximise profit by producing 4000 units