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Explanation & Answer
Sending Chapter 15 shortly
OLIGOPOLY AND GAME THEORY
1
Chapter 14 Homework
a)
Price
Olive
of Quantity
demanded/gallon
Oil/gallon
Total
Marginal
Marginal
revenue
Cost
profit
P*Q
100
1000
100000
40000
60000
90
1500
135000
60000
75000
80
2000
160000
80000
80000
70
2500
175000
100000
75000
60
3000
180000
120000
60000
50
3500
175000
140000
35000
40
4000
160000
160000
0
30
4500
135000
180000
(45000)
20
5000
100000
200000
(100000)
10
5500
55000
220000
(165000)
The cartel will have to sell the Olive oil at $ 80 per gallon. The number of gallons to sold 2000
gallons in order to get a profit of $ 80,000. Since the two families share the same market share the
profits will be split 50/50 and therefore, the profit will be $40,000 each.
b) When increase the gallons of olive oil, it means the market f...