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    maximize profit

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    There are only two firms in the widget industry. The total demand for widgets is Q = 30 - 2P. The two firms have identical cost functions:

    TC = 3 + 10Q. The two firms agree to collude and act as though the industry were a monopoly. At what price and quantity will this cartel maximize profit?

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    Solution Preview

    Q = 30-2P; TC = 3+10Q

    TC = 3+10*(30-2P) = 303 - 20P
    Total ...

    Solution Summary

    The point to maximize profit is noted.