3. Because cooking soufflés is incredibly difficult, the supplyof soufflés in a small French town is controlled by two bak-ers, Gaston and Pierre. The demand for soufflés is givenby P=30-20, and the marginal and average total cost ofproducing soufflés is $6. Because baking a soufflé requiresa great deal of work and preparation, each morning Gastonand Pierre make a binding decision about how many souf-flés to bake.HomW buanolinmas-gitalprofa. Suppose that Pierre and Gaston agree to collude,evenly splitting the output a monopolist would makeand charging the monopoly price.i. Derive the equation for the monopolist's marginalrevenue curve. On obii. Determine thefor the cartel..profit-maximizingnebyliii. Determine the price Pierre and Gaston will be ableto charge.collective outputhostiv. Determine profits for Pierre and Gaston individu-ally, as well as for the cartel as a whole.b. Suppose that Pierre cheats on the cartel agreement bybaking one extra soufflé each morning.JORTEShailogonemi. What does the extra production do to the price ofsoufflés in the marketplace?ii. Calculate Pierre's profit. How much did he gain bycheating?iii. Calculate Gaston's profit. How much did Pierre'sdla obieccheating cost him?202080 BrV.Ynoinsamosiv. How much potential profit does the group lose as aDisamostoresult of Pierre's cheating?01511Dc. Suppose that Gaston, fed up with Pierre's behavior,also begins baking one extra soufflé each morning.Halogo.com si. How does the extra production affect the price ofsoufflés in the marketplace?100tre anonomii. Calculate Gaston's profit. How much did he gainby cheating?THEiii.Calculate Pierre's profit. How much did Gaston'scheating cost him?iv.How much potential profit does the group lose as aresult of Pierre's and Gaston's cheating?Demonstrate that it is in neither Pierre's norGaston's best interest to cheat further on theirvode el agreement.es

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. Because cooking soufflés is incredibly difficult, the supply of soufflés in a small French town is controlled by two bak- ers, Gaston and Pierre. The demand for soufflés is given by P=30-20, and the marginal and average total cost of producing soufflés is $6. Because baking a soufflé requires a great deal of work and preparation, each morning Gastor and Pierre make a binding decision about how many souf- flés to bake. a. Suppose that Pierre and Gaston agree to collude evenly splitting the output a monopolist would make and charging the monopoly price. i. Derive the equation for the monopolist's margina revenue curve.

. Because cooking soufflés is incredibly difficult, the supply of soufflés in a small French town is controlled by two bak- ers, Gaston and Pierre. The demand for soufflés is given by P=30-20, and the marginal and average total cost of producing soufflés is $6. Because baking a soufflé requires a great deal of work and preparation, each morning Gastor and Pierre make a binding decision about how many souf- flés to bake. a. Suppose that Pierre and Gaston agree to collude evenly splitting the output a monopolist would make and charging the monopoly price. i. Derive the equation for the monopolist's margina revenue curve.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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