PRICE (Dollars) 100 90 80 70 60 50 40 30 20 10 0 MC 0 + 10 ATC D D 1 20 30 40 50 60 70 80 90 100 QUANTITY (Units) If the firm adheres to the cartel agreement, its profits will be $ Area If the firm breaks the cartel agreement and produces 90 units, its profits will be

ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 3.7P
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Question
PRICE (Dollars)
100
90
80
70
60
50
40
30
20
10
0
MC
0
+
10
ATC
D
D
1
20 30 40 50 60 70 80 90 100
QUANTITY (Units)
If the firm adheres to the cartel agreement, its profits will be $
Area
If the firm breaks the cartel agreement and produces 90 units, its profits will be
Transcribed Image Text:PRICE (Dollars) 100 90 80 70 60 50 40 30 20 10 0 MC 0 + 10 ATC D D 1 20 30 40 50 60 70 80 90 100 QUANTITY (Units) If the firm adheres to the cartel agreement, its profits will be $ Area If the firm breaks the cartel agreement and produces 90 units, its profits will be
3. Working with Numbers and Graphs Q4
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 25 units. The cartel price is $85 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.
Transcribed Image Text:3. Working with Numbers and Graphs Q4 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 25 units. The cartel price is $85 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.
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