Sketch a diagram to illustrate the competitive market for bread, showing the equilibrium where 5,000 loaves are sold at a price of 2.00. 2. Suppose that the bakeries get together to form a cartel. They agree to raise the price to 2.70, and jointly cut production to supply the number of loaves that consumers demand at that price. Shade the areas on your diagram to show the consumer surplus, producer surplus, and deadweight loss caused by the cartel. For what kinds of goods would you expect the supply curve to be highly elastic? Draw diagrams to illustrate how the share of the gains from trade obtained by producers depends on the elasticity of the supply curve. 

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To illustrate the competitive market for bread 1 Competitive Market for Bread The diagram below show... View the full answer