Question

Daisy and Petunia are flower vendors that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a bouquet of flowers is constant and equals $1.20 per bouquet. Assume that neither firm had any startup costs. That is, marginal cost equals average cost (AC) for each firm. Suppose that Daisy and Petunia form a cartel, and the firms divide the output evenly. (Note: This is only for convenience, since nothing in the model requires that the two companies must equally share the output.) Place the black point (X symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Daisy and Petunia choose to work together. Drop lines will extend to both axes automatically. PRICE (Dollars per bouquet] 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Monopoly Outcome 18 Demand MR 0 80 160 240320 400 480 QUANTITY (Bouquets of flowers per day] Hlp Clear All

Answer 1

lo D n

ry し//udion "ir 3스 = in Date.. 2abil Ca etfer idve 3