MR = Change in TR / Change in Q
P | Output | TR | MR |
14 | 0 | 0 | |
13 | 5 | 65 | 13 |
12 | 10 | 120 | 11 |
11 | 15 | 165 | 9 |
10 | 20 | 200 | 7 |
9 | 25 | 225 | 5 |
8 | 30 | 240 | 3 |
7 | 35 | 245 | 1 |
6 | 40 | 240 | -1 |
5 | 45 | 225 | -3 |
4 | 50 | 200 | -5 |
3 | 55 | 165 | -7 |
2 | 60 | 120 | -9 |
1 | 65 | 65 | -11 |
0 | 70 | 0 | -13 |
Setting MR = MC for profit maximization, from table we se MR & MC are not equal, so Profit maximizing output is where MR is just above MC
Here profit maximizing output = 25 units
units produced by each firm when profit is maximized = 25 / 2 = 12.5
When 5 more units are produced, Total units produced by MNO = 12.5 +5 = 17.5
Price decreases to 8
MNO's profit = 17.5 * 8 - 17.5*4 = 70
Third option is correct answer
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