Table 17-3
The table shows the demand schedule for a particular product.

$$\begin{array} { | c | c | }
\hline \begin{array} { c }
\text { Quantity Demanded } \
\text { (Units) }
\end{array} & \begin{array} { c }
\text { Price } \
\text { (Dollars per unit) }
\end{array} \
\hline 0 & 16 \
\hline 1 & 14 \
\hline 2 & 12 \
\hline 3 & 10 \
\hline 4 & 8 \
\hline 5 & 6 \
\hline 6 & 4 \
\hline 7 & 2 \
\hline 8 & 0 \
\hline
\end{array}$$

-Refer to Table 17-3. Suppose the market for this product is served by two firms that have formed a cartel. What price will the cartel charge in this market if the marginal cost of production is $4?
A)$6
B)$8
C)$10
D)$12

Question

Table 17-3
The table shows the demand schedule for a particular product.
​
​
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Quantity Demanded } \
\text { (Units) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (Dollars per unit) }
\end{array} \
\hline 0 & 16 \
\hline 1 & 14 \
\hline 2 & 12 \
\hline 3 & 10 \
\hline 4 & 8 \
\hline 5 & 6 \
\hline 6 & 4 \
\hline 7 & 2 \
\hline 8 & 0 \
\hline
\end{array}$$ ​
​
-Refer to Table 17-3. Suppose the market for this product is served by two firms that have formed a cartel. What price will the cartel charge in this market if the marginal cost of production is $4?
A)$6
B)$8
C)$10
D)$12

Quizplus · Accepted Answer

The cartel will aim to maximize profits by setting a price where marginal revenue equals marginal cost. Given the marginal cost of production is $4, the cartel will produce and sell 6 units (as seen when the price drops to $4, quantity demanded increases to 6 units). To maximize profits, the cartel will set the price at the highest level where 6 units are demanded, which is $10 according to the demand schedule.

Table 17-3 the Table Shows the Demand Schedule for a Particular

Table 17-3
the Table Shows the Demand Schedule for a Particular