Refer to Figure 14.1. Four firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. At the profit-maximizing output, the profit on each pack of gum is

A) $0.04.
B) $0.09.
C) $0.15.
D) $0.25.

Question

SWAPNIL PORWAL · Accepted Answer

Final Answer : B, Explanation :  Given the information, without the specific details from Figure 14.1, we can't directly calculate or visually confirm the profit per pack of gum for a cartel. However, in typical scenarios where firms form a cartel, they aim to maximize joint profits by reducing output and increasing prices compared to a competitive market outcome. The correct answer would usually be derived from analyzing the given demand curve, cost structures, and the cartel's output and pricing decisions in the figure. Since I can't see Figure 14.1, the explanation is based on general principles of how cartels operate and the economic theory behind profit maximization in oligopolistic markets.

Refer to Figure 14.1. Four firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. At the profit-maximizing output, the profit on each pack of gum is

A) $0.04.
B) $0.09.
C) $0.15.
D) $0.25.

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Learning Objectives

Related questions

Refer to Figure 14.1. Four firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. At the profit-maximizing output, the profit on each pack of gum isA) $0.04.B) $0.09.C) $0.15.D) $0.25.

Definitions

Learning Objectives

Learning Objectives

Related questions

Refer to Figure 14.1. Four firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. At the profit-maximizing output, the profit on each pack of gum is

A) $0.04.
B) $0.09.
C) $0.15.
D) $0.25.