Question

suppose that tge demand curve facing OPEC is given by P=120-2Q and that ecah members cpst of producing oil AC=MC =$20.Find the cartels profit maximizing total output and price

Answer 1

$$\pi=TR-TC$$

$$\pi=(120-2Q)Q-20Q$$

$$\pi=100Q-2Q^2$$

$$\frac{\delta \pi}{\delta Q}=100-4Q$$

$$Q=25$$

$$p=70$$

$$\pi=1250$$