Q. Two industries face a demand equation given by:
P=200,000-6(q1+q2) where q1 and q2 are outputs of two industries. total cost equations for two industries are given by: TC1=8000q1 and TC2=8000q2
(A)If each of industries sets its own output rate to maximize its profits, assuming that or industry holds its rate of output constant, solve for optimal output of each industry (q1* and q2*), optimal cost (P*) and profit of each industry.
(B)If industries collude, Illustrate what will be monopoly cost (optimal cost P*), total output of two industries (Q= q1 + q2) and total profits of two industries?