Donsider a hypothetical demand schedule for monosodium glutamate $($MSG$).$ Suppose that Ajinomoto holds $50\%$ of the market, Jiali holds $30\%$ of the market, and Quingdao holds $20\%$ of the market.

Suppose the three firms agree to form a cartel to fix production of monosodium glutamate. Assume marginal cost equals zero, and the output is split equally across the firms.

What quantity maximizes the cartel's profit?

$90$ million pounds

$20$ million pounds

$300$ million pounds

$110$ million pounds

Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero.

How would this affect the incentive of Ajinimoto to act noncooperatively and ch$$nge its output?

$$ Ajinomoto will have an incentive to decrease its output of MSG$.$

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