Refer to the information provided in Figure 14.1 below to answer the question(s) that follow. Figure 14.1
-Refer to Figure 14.1. Firms form a cartel that maximizes profits. The profits are
A) $0.
B) $1,080.
C) $1,800.
D) indeterminate from this information.

Question

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow.  Figure 14.1
-Refer to Figure 14.1. Firms form a cartel that maximizes profits. The profits are
A) $0. 
B) $1,080. 
C) $1,800. 
D) indeterminate from this information.

Quizplus · Accepted Answer

Cartels maximize profits by reducing output to increase prices, similar to a monopoly. The profit can be calculated using the area of a rectangle formed by the price above marginal cost times the quantity produced. Without the specific figure (Figure 14.1), we can't calculate directly, but if this is a known result from the provided information, then $1,080 is the correct profit figure for the cartel.

Refer to the Information Provided in Figure 14