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Economics, Microeconomics
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45 - Firm Collusion for Profit sharing


Suppose that two firms, A and B, collude to share maximum profits.  If the average cost curve for Firm A is higher than the average cost curve for firm B at every output, then

a) firm A should produce nothing.
b) firm A should produce output as long as its marginal cost is less than Firm B's
c) both firms should produce where their marginal costs are equal to some number that exceed marginal revenue.
d) both firms should produce where their marginal costs are equal to marginal revenue
e) optimal output cannot be determined from the information profided

By OTA:  Mutasem Sinnokrot, PhD

OTA Rating:  4.9/5

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