2. Deviating from the collusive outcome Stargell and Schmidt are brewing companies that operate in a duopoly (twofirm oligopoly). The daily marginal cost (MIC) of producing a can of beer is constant and equals $1.20 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (MC) for each rm. Suppose that Stargell and Schmidt form a cartel, and the rms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Piece the biopic point (pius symboi) on the foh'owing graph to indicate the protmaximizing price and combined quantity of cutout if Stargeii and Schmidt choose to work together. zoo Demand 1.30 _ Leo Monopoly Outcome 1.4a MC 2 ATC 1.20 1.00 0.30 PRICE (Dollars per can) 0.00 0.40 0.20 020405030100120140150130200 QUANTITY {Cans of beer) when they act as a profit-maximizing cartel, each company will produce \\:|cans and charge per can. Given this information, each rm earns a dailyr prot 0- , so the daily total industry prot in the beer market is . lOligopolists often behave noncooperativelvr and act in their own selfinterest even though this decreases total prot in the market. Again, assume the two companies form a cartel and decide to work together. Both rms initially.r agree to produce half the quantity that maximizes total industry.r profit. Now, suppose that Stargell decides to break the collusion and increase its output by 50%, while Schmidt continues to produce the amount set under the collusive agreement. Stargell's deviation from the collusive agreement causes the price of a can of beer to v to per can. Stargell's profit is nowI , while Schmidt's prot is now . Therefore, you can conclude that total inclustn.r prot v when Stargell increases its output bevoncl the collusive quantity