Suppose that all 150 identical firms in an industry form a cartel. The demand conditions for the cartel as well as the cost curves for each firm in the industry are illustrated. If 149 firms produce the output level specified by the cartel quota then the 150th firm earns profits of _____ if it produces at the quota level but earns profits of ____ it takes the cartel pace as given and maximizes its own profit.

a. $20, $180
b. $90, $120
c. $40, $138
d. $60, $0
e. $60, $180

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Firm Cartel MC, 70 70 S= MC ·ATC 50 40 40 25 25 D= AR MR 300 Quantity 600 Quantity Price ($)