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Figure: Monopoly Profits in Duopoly
-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.The figure shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits.If the firms collude to share the market demand equally,then each firm will act as if its marginal revenue curve is given by:

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Use the following to answer question:
Figure: Monopoly Profits in Duopoly

-(Figure: Monopoly Profits in Duopoly) Use Figure: Monopoly Profits in Duopoly.The figure shows how an industry consisting of two firms that face identical demand curves (D₁) can collude to increase profits.If the firms collude to share the market demand equally,then each firm will act as if its marginal revenue curve is given by:

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When firms collude to share the market demand equally, each firm perceives its demand as half of the total market demand, thus each will act as if its marginal revenue curve is the original one (MR₁), not a multiple or a different curve.

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