Iz, Lauren, Odd, and Ralph started a T‑shirt company. They can produce any number of T‑shirts at a cost of $ 2 per T‑shirt, both
marginal and average. They are the only producers of T‑shirts. As monopolists, they charge $ 20 per T‑shirt and obtain total profits of $ 10,000 . Now assume there are creative differences and they split the company in two. Lauren and Ralph join together and compete against Iz and Odd. If they compete on quantity, each company would produce 50 T‑shirts and charge $ 12 a T‑shirt. For technical reasons, assume that the quantity demanded is greater than zero for all prices greater than $0.
If, however, Ralph and Lauren compete directly against Iz and Odd in prices, the market price for T‑shirts will be________?
If, however, Ralph and Lauren compete directly against Iz and Odd in prices, the market price for T‑shirts will be________?
2 answers:
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