cans and charge 5 so the daily total industry profit in the beer market is S5 When they act as a profit-maximizing cartel, each company will produce information, each firm earns a daily profit of 5 per can. Given this Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume the two companies form a cartel and decide to work together. Both firms initially agree to produce half the quantity that maximizes total industry profit. Now, suppose that Mays decides to break the collusion and increase its output by 50%, while McCovey continues to produce the amount set under the collusive agreement. Using the demand curve shown in the previous graph, find the price associated with this new total level of combined output (the price at which this new level of output would be purchased by consumers). Mays's deviation from the collusive agreement causes the price of a can of beer to while McCovey's profit is now 5 Mays increases its output beyond the collusive quantity. to S Therefore, you can conclude that total industry profit per can. Mays's profit is now when

cans and charge 5 so the daily total industry profit in the beer market is S5 When they act as a profit-maximizing cartel, each company will produce information, each firm earns a daily profit of 5 per can. Given this Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume the two companies form a cartel and decide to work together. Both firms initially agree to produce half the quantity that maximizes total industry profit. Now, suppose that Mays decides to break the collusion and increase its output by 50%, while McCovey continues to produce the amount set under the collusive agreement. Using the demand curve shown in the previous graph, find the price associated with this new total level of combined output (the price at which this new level of output would be purchased by consumers). Mays's deviation from the collusive agreement causes the price of a can of beer to while McCovey's profit is now 5 Mays increases its output beyond the collusive quantity. to S Therefore, you can conclude that total industry profit per can. Mays's profit is now when

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Deviating from the collusive outcome Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.40 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together.
the question is in the image attached.
Would it be answer 1? Imagine a duopoly in which two firms, A and B, produce the monopoly profit-maximizing output and equally share the economic profit. If firm A increases output, 1)both firms' profits increase. 2)firm A's profits increase and firm B's profits decrease. 3)firm B's profits increase and firm A's profits decrease. 4)both firms' profits decrease. 5)firm A's profits increase and firm B's profits do not change.
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Russia, Iran and Qatar made the first serious moves in October 2008 toward forming an OPEC-style cartel for natural gas. Each of the countries can comply with the cartel agreement or to cheat on the cartel agreement. If all countries comply, the economic profit for each will be $140 million. If one country cheats, that country earns $200 million in economic profit and the other countries will have economic losses of $10 million. If all countries cheat, they break even. What are the strategies in this game? Earn between $140 and $200 million in profits. Cheat on the cartel agreement and earn -$10 million in profits. Comply with the agreement and earn $140 million in profit. Comply with the cartel agreement or to cheat on the cartel agreement.
Isolated Island has two wind turbines producing electricity, one owned by Dick and the other owned by Harry. Quantity demanded (units per day) Price (dollars per unit) The marginal cost of producing electricity is $4 a unit. 12 11 1 The table gives the demand schedule for electricity in this area. 10 2 9 3 If Dick and Harry form a cartel and maximize their joint profit, what will be the price of electricity and the total quantity produced? 8 4 7 5 If Dick and Harry form a cartel and maximize their joint profit, the price of a unit of electricity is $ and the quantity produced is units a day. 6 7
If in theory collusion is good for the members of a cartel, give at least three reasons why in practice collusion is not widespread
Consider the following The city of College Station, TX has a median home price of around $335,000 in December 2022. Market value is not necessarily the same as its assessed valuation for purposes of taxation (in fact they can be quite different), but for the purposes of this activity, the Brazos County Appraiser (an officer of the county government) has also assessed the value of the property and found it to be the same. Note: The appraiser may overvalue one's property. Higher property values = Higher tax base = higher property tax revenues for local governments = higher property tax bill for you! Many Texans appeal their assessment! This property is taxed at the following rates (from the Brazos Central Appraisal District)Links to an external site. levied by various local governments. (These rates are not represented as traditional mill rates, but are represented as dollars per $100 of assessed valuation.) Brazos County: $0.429411 City of College Station: $0.524613 College…
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Ma3. You operate in a duopoly in which you and a rival must simultaneously decide what price to charge for the same homogeneous product. Assume each you and your rival can choose a “low price” or a “high price”. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3 million. If you charge different prices, the one charging the high price loses $5 million and the one charging the low price makes $5 million. What is the Nash equilibrium for the non-repeated version of this game? Now suppose the game is infinitely repeated. If the interest rate is 10%, can you do better than you could in the non-repeated version of this game? If your answer is “yes”, provide the players’ strategies and any other conditions that must hold.
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