Asked by Jesse Francis on Jul 13, 2024

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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 total cost for the cartel is

A) $3,000.
B) $3,720.
C) $4,800.
D) $5,600.

Profit-maximizing Output

The level of production at which a firm achieves the highest possible profit, where marginal cost equals marginal revenue.

Total Cost

The sum of all costs required to produce a certain amount of a good or service, including fixed and variable costs.

  • Acquire knowledge about the idea of cartels and their effect on the enhancement of profit levels.
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AP
Akshar PatelJul 16, 2024
Final Answer :
B
Explanation :
The profit-maximizing output for a cartel is where its marginal revenue (MR) equals its marginal cost (MC). Without the specific figure (Figure 14.1) and details such as the demand curve equation, MR, MC, and the quantities involved, it's challenging to directly calculate the total cost at the profit-maximizing output. However, assuming the cartel operates efficiently and aims to maximize profits, it will produce at a quantity where MR = MC. The total cost at this output level can be determined by the information given in the question or the figure referenced. Since I can't see Figure 14.1, the correct answer (B) $3,720 is based on the premise that this information is provided within the context of the question or figure, which would typically involve calculating the area under the MC curve up to the profit-maximizing quantity or using given total cost information at that output level.