Please note that this question has not yet been graded. I have submitted this and other similar questions only to get an error message saying it cannot be answered due to it already being graded. This question has not yet been graded, thank you. ---## Cartel versus Competitive Outcome**A few rival firms provide airline services in the United States. Because the firms must have the appropriate technology, equipment, pilots, security, and customer service to maintain their businesses, there are economies of scale. The market for airplane travel is best characterized as _______.****The following graph shows the market demand conditions and long-run costs of production for individual firms in the market for airplane travel.****Assume all airlines produce an identical product and face identical cost curves.****Suppose all airlines successfully coordinate supply decisions to maximize profit as a cartel.****Place the green point (triangle symbol) on the graph to indicate the quantity of tickets per year the cartel will supply and the price it will charge. Dashed drop lines will automatically extend to both axes.**[Include Graph Description]The graph displayed below demonstrates the market dynamics for the airplane travel industry. It includes two key outcomes:1. **Cartel Outcome (indicated by green triangle symbols)**: Represents the coordinated supply decisions by the firms acting as a cartel to maximize collective profits.2. **Competitive Outcome (indicated by purple diamond symbols)**: Represents the outcome in a competitive market where firms act independently.### Graph Analysis#### Axes:- **Vertical Axis (Price per ticket)**: Showing the price airlines can charge for tickets.- **Horizontal Axis (Quantity of tickets per year)**: Showing the number of tickets produced and sold per year.#### Key Points:- The **Cartel Outcome** point identifies the price and quantity where the airlines, acting in concert, can maximize collective profits by restricting supply to raise prices.- The **Competitive Outcome** point identifies where supply and demand would balance in a competitive market, likely resulting in lower prices and higher quantities compared to the cartel scenario.---End of Content. ## Homework (Ch 11)### Instructions:Place the green point (triangle symbol) on the graph to indicate the quantity of tickets per year the cartel will supply and the price it will charge. Dashed drop lines will automatically extend to both axes.### Graph Description:The graph displays the relationship between the quantity of tickets and the price for a theoretical product within an oligopoly market structure. It includes the following lines:- **Demand Curve**: Slopes downward from the top left to the bottom right, demonstrating that higher prices lead to lower demand.- **Marginal Revenue (MR) Curve**: Lies below the demand curve, indicating the change in total revenue from selling one additional ticket.- **Long-Run Average Total Cost (LRATC) Curve**: A horizontal line, indicating constant average total costs over various quantities.- **Cartel Outcome (Green Triangle)**: Represents the price and quantity the cartel will supply.- **Competitive Outcome (Purple Diamond)**: Represents the price and quantity in a more competitive market scenario.The graph has specific points marked:- **X-axis**: Quantity (thousands of tickets per year) ranges from 0 to 1000.- **Y-axis**: Price (dollars per ticket) ranges from 0 to 500.---### Further Instructions:1. **Observe how the cartel members interact with market prices.**2. **Place the given marker corresponding to the cartel's outcome at the correct price and quantity projections.**3. **Identify how some cartel members might undercut prices to gain more market share.**### Additional Task:Use the purple point (diamond symbol) on the graph to indicate the price and quantity that will prevail in the long run if all firms in the oligopoly compete with one another effectively.---This activity helps illustrate key concepts in oligopoly theory, including price setting and the implications of cartels versus competitive outcomes on market prices and quantities.

Oligopoly which is refers to market circumstances or a kind of market organization in which…

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14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC