Below is the demand curve for the market for Monster Trucks.There are two Monster Truck producers. For

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Question:

Below is the demand curve for the market for Monster Trucks.There are two Monster Truck producers. For simplicity, assume thatthe costs of producing a Monster Truck is zero. (AC = 0, FC =0)

Q Demand Price

1 $18

2 $16

3 $14

4 $12

5 $10

6 $9

7 $7

8 $6

9 $5

Assume the two producers collude (split production and profitsevenly) to answer the first three questions.

A. What price will they charge?

B. What is the total quantity produced?

C. What are the Profits of each firm?

If one of the producers produces an extra unit to get higherprofits, what is the new market price? What are the profits forthis firm when they break the agreement? (Use this information toanswer the next three questions)

D. Price:

E. Cheater's profits?

F. Other firm's profits