Suppose Grandis and Immanis Are the Only Two Companies That

Multiple Choice

Suppose Grandis and Immanis are the only two companies that sell the product whose market demand curve is shown in the accompanying figure. For both companies, both average total cost and marginal cost are constant and equal to $2 (ATC = MC = $2) . Suppose Grandis and Immanis agree to collude by both charging the price a monopolist would charge and each producing half of the monopolist's profit-maximizing level of output. If they both abide by this agreement, then each will earn a profit of ________ per day.

A) $150
B) $75
C) $90
D) $45