Suppose That Mystic Energy and E-Storm Are the Only Two

Multiple Choice

Suppose that Mystic Energy and E-Storm are the only two producers of hydrogen fuel cells. The market inverse demand curve for hydrogen fuel cells is P = 1,500 - 0.08Q, where Q is the number of fuels cells per month and P is the price per fuel cell. The marginal cost is constant at $500. Acting as a cartel, the owners of Mystic Energy and E-Storm agree to evenly split the market output. In this case, Mystic Energy earns a profit of $ ____.

A) 3,062,500
B) 1,531,250
C) 6,125,000
D) 500,000