Suppose that all firms in an industry collude to reduce output, which raises the product price to $7.86 and requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200 units. What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join the proposed cartel, assuming that after the fact, no firms cheat on the specified cartel agreement? Explain your reasoning. In the absense of collusion among the firms, the typical perfectly competitive firm's economic profits are average total cost. because price Using the rectangle drawing tool, show the amount of economic profits for the typical perfectly competitive firm if it joins the cartel Label this area 'Profits." Carefully follow the instructions above, and only draw the required object If ATC $5.33 at the reduced output of 200 units, then the typical firm's economic incentive to participate in the cartel is $(Enter your response as a whole number.) 7.86 3 42 Price, Cost & Marginal Revenue ($ per unit) 200 500 Quantity (units per week) MC ATC G MRm Suppose that all firms in an industry collude to reduce output, which raises the product price to $7.86 and requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200 units. What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join the proposed cartel, assuming that, after the fact, no firms cheat on the specified cartel agreement? Explain your reasoning. In the absense of collusion among the firms, the typical perfectly competitive firm's economic profits are because price average total cost. Using the rectangle drawing tool, show the amount of economic profits for the typical perfectly competitive firm if it joins the cartel. Label this area 'Profits.' Carefully follow the instructions above, and only draw the required object. If ATC = $5.33 at the reduced output of 200 units, then the typical firm's economic incentive to participate in the cartel is $ (Enter your response as a whole number.) Suppose that all furs in an industry collude to reduce output, which raises the product price to $7 86 and requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200 units What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join the proposed carlel, assuming that, after the fact, no firms cheat on the specified cartel agreement? Explain your reasoning In the absense of collusion among the firms, the typical perfectly competitive firm's economic profits are average total cost. because price Using the rectangle drawing tool, show the amount of economix: profits for the typical perfer:lly competitive firm if it joins the cartel Label this area "Profits." Carefully follow the instructions above, and only draw the required object. fATC $5 33 Hl the reduced participate in the cartel is S output of 200 units, then the typical lim's economic incentive to (Enter your response as a whole number.) 7.86 MC ATC G MRm 3.42 200 500 Quantity (units per week)

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
Suppose that all firms in an industry collude to reduce output, which raises the product price to $7.86 and
requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200
units. What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join
the proposed cartel, assuming that after the fact, no firms cheat on the specified cartel agreement?
Explain your reasoning.
In the absense of collusion among the firms, the typical perfectly competitive firm's economic
profits are
average total cost.
because price
Using the rectangle drawing tool, show the amount of economic profits for the typical perfectly
competitive firm if it joins the cartel Label this area 'Profits."
Carefully follow the instructions above, and only draw the required object
If ATC $5.33 at the reduced output of 200 units, then the typical firm's economic incentive to
participate in the cartel is $(Enter your response as a whole number.)
7.86
3 42
Price, Cost & Marginal Revenue ($ per unit)
200 500
Quantity (units per week)
MC
ATC
G
MRm
Transcribed Image Text:Suppose that all firms in an industry collude to reduce output, which raises the product price to $7.86 and requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200 units. What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join the proposed cartel, assuming that after the fact, no firms cheat on the specified cartel agreement? Explain your reasoning. In the absense of collusion among the firms, the typical perfectly competitive firm's economic profits are average total cost. because price Using the rectangle drawing tool, show the amount of economic profits for the typical perfectly competitive firm if it joins the cartel Label this area 'Profits." Carefully follow the instructions above, and only draw the required object If ATC $5.33 at the reduced output of 200 units, then the typical firm's economic incentive to participate in the cartel is $(Enter your response as a whole number.) 7.86 3 42 Price, Cost & Marginal Revenue ($ per unit) 200 500 Quantity (units per week) MC ATC G MRm
Suppose that all firms in an industry collude to reduce output, which raises the product price to $7.86 and requires the
perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200 units. What is the total
dollar amount of this typical perfectly competitive firm's economic incentive to join the proposed cartel, assuming that,
after the fact, no firms cheat on the specified cartel agreement? Explain your reasoning. In the absense of collusion
among the firms, the typical perfectly competitive firm's economic profits are because price average total cost. Using the
rectangle drawing tool, show the amount of economic profits for the typical perfectly competitive firm if it joins the
cartel. Label this area 'Profits.' Carefully follow the instructions above, and only draw the required object. If ATC = $5.33
at the reduced output of 200 units, then the typical firm's economic incentive to participate in the cartel is $ (Enter your
response as a whole number.)
Suppose that all furs in an industry collude to reduce output, which raises the product price to $7 86 and
requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200
units What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join
the proposed carlel, assuming that, after the fact, no firms cheat on the specified cartel agreement?
Explain your reasoning
In the absense of collusion among the firms, the typical perfectly competitive firm's economic
profits are
average total cost.
because price
Using the rectangle drawing tool, show the amount of economix: profits for the typical perfer:lly
competitive firm if it joins the cartel Label this area "Profits."
Carefully follow the instructions above, and only draw the required object.
fATC $5 33 Hl the reduced
participate in the cartel is S
output of 200 units, then the typical lim's economic incentive to
(Enter your response as a whole number.)
7.86
MC
ATC G
MRm
3.42
200 500
Quantity (units per week)
Transcribed Image Text:Suppose that all firms in an industry collude to reduce output, which raises the product price to $7.86 and requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200 units. What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join the proposed cartel, assuming that, after the fact, no firms cheat on the specified cartel agreement? Explain your reasoning. In the absense of collusion among the firms, the typical perfectly competitive firm's economic profits are because price average total cost. Using the rectangle drawing tool, show the amount of economic profits for the typical perfectly competitive firm if it joins the cartel. Label this area 'Profits.' Carefully follow the instructions above, and only draw the required object. If ATC = $5.33 at the reduced output of 200 units, then the typical firm's economic incentive to participate in the cartel is $ (Enter your response as a whole number.) Suppose that all furs in an industry collude to reduce output, which raises the product price to $7 86 and requires the perfectly competitive firm in the figure to the right to reduce its output from 500 units to 200 units What is the total dollar amount of this typical perfectly competitive firm's economic incentive to join the proposed carlel, assuming that, after the fact, no firms cheat on the specified cartel agreement? Explain your reasoning In the absense of collusion among the firms, the typical perfectly competitive firm's economic profits are average total cost. because price Using the rectangle drawing tool, show the amount of economix: profits for the typical perfer:lly competitive firm if it joins the cartel Label this area "Profits." Carefully follow the instructions above, and only draw the required object. fATC $5 33 Hl the reduced participate in the cartel is S output of 200 units, then the typical lim's economic incentive to (Enter your response as a whole number.) 7.86 MC ATC G MRm 3.42 200 500 Quantity (units per week)
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