Question: A cartel includes large and small companies each with different long run average and marginal cost curves. A cartel requires each member to reduce output

A cartel includes large and small companies each with different long run average and marginal cost curves. A cartel requires each member to reduce output by 15% in the short run from the total output produced while behaving competitively so that the cartel can maximize profits.the authority assigns a quota to each firm that is 15% less than the output produced by the firm in the long run competitive equilibrium

1)explain why the 15% will not maximize total profits of the cartel?

2)How could you assign the quota of each firm to maximize total cartel and profits?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

A typical section of a building wall is shown in Fig. P1758. This section extends in and out of the page and is repeated in the vertical direction. The wall support members are made of steel (k = 50...

a)Here is the cost structure for Frodo's store. Fill in the blanks. 1 ring $50 $55 2 rings $50 $100 3 rings $50 $130 4 rings $50 $180 5 rings $50 $240 6 rings $50 $305 7 rings $50 $375 8 rings $50...

Answer all questions Questions 1 to 20 are multiple-choice type questions and you should answer all of them. Only ONE answer is correct and you should write either A, B, C, D or E as appropriate to...

refer to the files below (20 points) The market inverse demand curve is P(y) = 10 - 2y, and a monopolist's cost curve is y2 + 2. (a) What output level y maximizes the monopolist's revenue? What...

Management accounting assignment: Write a critique with reference list. Please help me write something as much as you could. Analysing technology investmentsfrom NPV to Strategic Cost Management...

Question 4 (20 minutes) The province wishes to improve our environment and accordingly will subsidise your municipality $ 2 for every $1 you spend on sewage facilities up to a maximum of $ 1920. Your...

Two major themes from the introduction to module 4 are "Project Management" and "Managing Risk." Discuss, in depth, your analysis of the company's actions in relation to the concepts of these two...

Supply Chain Management Introduction Outline What is supply chain management? Significance of supply chain management. Push vs. Pull processes utdallas.edu/~metin 1 A Generic Supply Chain Sources:...

Good Morning, I need this Mid Term Exam completed as soon as possible, I am late on this assignment so please if you have any additions questions about how to completed please let me know. Regards,...

Question 1 1 pts There are no barriers to entry in which two market structures? (O Perfect competition and oligopoly O Perfect competition and pure monopoly (O Oligopoly and monopolistic competition...

15) Economic costs of production differ from accounting costs in that A) economic costs include expenditures for hired resources while accounting costs do not. B) economic costs add the opportunity...

Lola is in charge of monitoring environmental impact at a medical devices manufacturer. In order to identify, manage, monitor and control the companys environmental risks and opportunities, she...

1. A machine was purchased 4 years ago for $28.000. It's estimated life was 7 years with SO salvage. It's market value today is $35.000. It's now thought that it's salvage in 3 years will be $12.000....

Which of the following types of data information is especially valuable for making prediction? Question 1 4 options: Relationship information Central tendency information Distribution information...

QUESTION 3 Express in scientific notation: 145,300.1 QUESTION 4 Express in scientific notation: 0.000040 QUESTION 5 Express in scientific notation: -56 QUESTION 6 Express in scientific notation:...

An area can be irrigated by pumping water from a nearby river. Two competing installations are being considered. The MARR is 12% per year and electric power for the pumps cost $0.06 per kWh. Recall...

b) The following table gives the ages of 20 students in a certain hospital. class Frequency(f) Mid x .x O up to 4 4 up to 8 8 up to 12 12 up to 16 16 up to 20 | Total 2. 2 4 4 8 6 18 36 108 6 10 60...

The following input is provided for developing an aggregate production plan for January through September, 2011; Inventory at the end of December 2010 = 400 units Forecast demand for January, 2011 =...

7. Imagine a communication situation in a work context or in the home situation that has made a big impression on you, positively or negatively. a. Examine now i. your own intentions ii. what you...

Personal role: This consists of service to family and friends.

The role of life: It consists of your own service to yourself.