The following graph shows the marginal cost (MC) and average total cost (ATC) and the initial demand (D₁) curves of a perfectly competitive firm. Suppose this firm forms a cartel with other firms in the industry. Because of the cartel agreement, it has been assigned a production quota of 35 units. The cartel price is $80 per unit of output. You may use the purple rectangle (diamond symbols) to help you answer the questions that follow. You will not be graded on any changes you make to the graph. PRICE (Dollars) 100 90 80 70 60 50 40 30 20 10 0 MC 0 10 20 I | ATC || D₂ If the firm adheres to the cartel agreement, its profits will be $ D₁ 1 30 40 50 60 70 80 90 100 QUANTITY (Units) Area If the firm breaks the cartel agreement and produces 85 units, its profits will be $ ?

The following graph shows the marginal cost (MC) and average total cost (ATC) and the initial demand (D₁) curves of a perfectly competitive firm. Suppose this firm forms a cartel with other firms in the industry. Because of the cartel agreement, it has been assigned a production quota of 35 units. The cartel price is $80 per unit of output. You may use the purple rectangle (diamond symbols) to help you answer the questions that follow. You will not be graded on any changes you make to the graph. PRICE (Dollars) 100 90 80 70 60 50 40 30 20 10 0 MC 0 10 20 I | ATC || D₂ If the firm adheres to the cartel agreement, its profits will be $ D₁ 1 30 40 50 60 70 80 90 100 QUANTITY (Units) Area If the firm breaks the cartel agreement and produces 85 units, its profits will be $ ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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