Assume that a six-firm cartel supplies 500 million units of Whatailsya energy drink at a price of $5.00 per unit. Each firm supplies an equal share of the cartel's output. One firm decides to cheat and supplies 50 million extra units, causing the price of Whatailsya to decrease to $4.50 per unit. Assuming that the loss due to the fall in price is evenly spread across all firms in the cartel, what is the net gain for the cheating firm, in millions of dollars? Round your answer to the nearest million. net gain: $ million

Assume that a six-firm cartel supplies 500 million units of Whatailsya energy drink at a price of $5.00 per unit. Each firm supplies an equal share of the cartel's output. One firm decides to cheat and supplies 50 million extra units, causing the price of Whatailsya to decrease to $4.50 per unit. Assuming that the loss due to the fall in price is evenly spread across all firms in the cartel, what is the net gain for the cheating firm, in millions of dollars? Round your answer to the nearest million. net gain: $ million

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Please answer the question according to the directions given on the image given.

Assume that a six-firm cartel supplies 500 million units of Whatailsya energy drink at a price of $5.00 per unit. Each firm
supplies an equal share of the cartel's output. One firm decides to cheat and supplies 50 million extra units, causing the price of
Whatailsya to decrease to $4.50 per unit.
Assuming that the loss due to the fall in price is evenly spread across all firms in the cartel, what is the net gain for the cheating
firm, in millions of dollars? Round your answer to the nearest million.
net gain: $
million

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