-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are ________ firms,each producing ________ units per hour.
A) 3; 4,000
B) 4; 3,000
C) 2; 6,000
D) 2; 4,000
E) 2; 12,000

Question

-The figure above shows the market demand curve and the ATC curve for a firm.Each firm in the market has the same ATC curve.If the firms in the industry agree to form a cartel,the firms in the industry make an economic profit if there are ________ firms,each producing ________ units per hour.
A) 3; 4,000 
B) 4; 3,000 
C) 2; 6,000 
D) 2; 4,000 
E) 2; 12,000

Quizplus · Accepted Answer

The profit-maximizing quantity for a cartel is where the ATC curve intersects the demand curve. In this case, that occurs at a quantity of 4,000 units per hour. The number of firms in the cartel is irrelevant, as long as they all agree to produce the same quantity.

-The Figure Above Shows the Market Demand Curve and the ATC