In Fruitland, strawberries are sold in 4-litre baskets to customers on a pick-your-own basis. There are...

  

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In Fruitland, strawberries are sold in 4-litre baskets to customers on a "pick-your-own" basis. There are 2 farmers who sell strawberries: Mickey and Kit. There are no costs of supplying strawberries for sale for either farmer, so each has MC = ATC=0. Profit therefore is simply TR. Market demand for strawberries is given in the accompanying table. If the market were served by a monopolist, the quantity traded would be 80 baskets, the price per 4-litre basket would be $14.50, and the profit for the firm would be $1160.00. If Mickey and Kit decided to collude, each would have an individual quantity supplied of 40 baskets and each would have profits of $580.00. Suppose Mickey and Kit agree to split the monopoly outcome. Kit, acting in her own self-interest, realizes that she can cheat and supply 60 baskets. What will Kit's profits be if she cheats? What will Mickey's profits be if Kit cheats? Click the icon to view market demand for strawberries. Kit's profits if she cheats will be $ www Mickey's profits if Kit cheats will be $ Market Demand for Strawberries P 18.00 17.25 16.00 14.50 11.50 9.50 7.50 6.00 20 40 60 80 100 120 140 160 TR 360.00 690.00 960.00 1160.00 1150.00 1140.00 1050.00 960.00 I In Fruitland, strawberries are sold in 4-litre baskets to customers on a "pick-your-own" basis. There are 2 farmers who sell strawberries: Mickey and Kit. There are no costs of supplying strawberries for sale for either farmer, so each has MC = ATC=0. Profit therefore is simply TR. Market demand for strawberries is given in the accompanying table. If the market were served by a monopolist, the quantity traded would be 80 baskets, the price per 4-litre basket would be $14.50, and the profit for the firm would be $1160.00. If Mickey and Kit decided to collude, each would have an individual quantity supplied of 40 baskets and each would have profits of $580.00. Suppose Mickey and Kit agree to split the monopoly outcome. Kit, acting in her own self-interest, realizes that she can cheat and supply 60 baskets. What will Kit's profits be if she cheats? What will Mickey's profits be if Kit cheats? Click the icon to view market demand for strawberries. Kit's profits if she cheats will be $ www Mickey's profits if Kit cheats will be $ Market Demand for Strawberries P 18.00 17.25 16.00 14.50 11.50 9.50 7.50 6.00 20 40 60 80 100 120 140 160 TR 360.00 690.00 960.00 1160.00 1150.00 1140.00 1050.00 960.00 I

Answer rating: 100% (QA)

To determine Kits profits if she cheats and Mickeys profits if Kit cheats we need to understand the ... View the full answer