$70 $45 FIRM IN A CARTEL 80 98 MC ATC The graph above shows a firm which is part of a cartel. Suppose that when the cartel agreement is in place and all firms abide by the agreement, then each firm produces 80 units of output and the cartel is able to charge the price of $70 per unit. Suppose a firm cheats on the agreement by increasing its output to 98 units. Using the information given in the graph above, calculate the cheating firm's profit when it cheats on the cartel agreement (you can assume that the price charged by the cartel does not change). $450 $6,860 O $2,450 $2,000

$70 $45 FIRM IN A CARTEL 80 98 MC ATC The graph above shows a firm which is part of a cartel. Suppose that when the cartel agreement is in place and all firms abide by the agreement, then each firm produces 80 units of output and the cartel is able to charge the price of $70 per unit. Suppose a firm cheats on the agreement by increasing its output to 98 units. Using the information given in the graph above, calculate the cheating firm's profit when it cheats on the cartel agreement (you can assume that the price charged by the cartel does not change). $450 $6,860 O $2,450 $2,000

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

22
$
$70
$45
FIRM IN A
CARTEL
80
$6,860
O $2,450
$2,000
98
MC
ATC
The graph above shows a firm which is part of a cartel. Suppose that when the cartel agreement is in place and all firms abide by the agreement, then each firm produces 80 units
of output and the cartel is able to charge the price of $70 per unit.
Suppose a firm cheats on the agreement by increasing its output to 98 units. Using the information given in the graph above, calculate the cheating firm's profit when it cheats on
the cartel agreement (you can assume that the price charged by the cartel does not change).
O $450

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