a) Using the following graph state the price and quantity the firm will be at if the oligopolymarket is competitive and in long run equilibrium. Explain why the firm will be at that price andquantity.MCATC1 E1020304050607080Quantityb) Using the same graph explain what the price and quantity would be if the market formed acartel. Explain the cartel and how it works, and why firms form them.Price and Cost (dollars)

Answered: MC 8 ATC 7 6 5.5 5 3. 2 ist 15t

Business

Economics

MC 8 ATC 7 6 5.5 5 3. 2 ist 15t

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter28: Antitrust And Regulation

Section: Chapter Questions

Problem 2E

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Question

a) Using the following graph state the price and quantity the firm will be at if the oligopoly
market is competitive and in long run equilibrium. Explain why the firm will be at that price and
quantity.
MC
ATC
1 E
10
20
30
40
50
60
70
80
Quantity
b) Using the same graph explain what the price and quantity would be if the market formed a
cartel. Explain the cartel and how it works, and why firms form them.
Price and Cost (dollars)

Expert Solution

Step 1

An oligopoly is a market form wherein a market is managed by a small number of companies with high numbers of sellers.

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