QUESTION Price of Quaatity elf s dominated by two producers,Manganet and Ray Eac

Question

QUESTION Price of Quaatity elf s dominated by two producers,Manganet and Ray Each firm can produce Table: Demand Schedule for Gadgetsi Lock at the table Demand Scheddle for Margaret decides to cheat Gadgets. The or gadgets have formed a cartel and are maximzing total industry prots that Pese two producers and Ray's profe will be_ gadgets. Suppose on the agreement and sel 100 more gadgets, Margaret's protit will be 1.250 $1,250 $500, $500 $1,400, $1,000 s1.000, $1,400 t peints Save Ans QUESTION7 Table: Dewand Scheduke of Gadgets Price of Quaskity of 510 20 8 8 9 3 4 5

Explanation / Answer

Ans:

Marganet's profit will be $1400 and Ray's profit will be $1000

The profit maximizing output for the cartel is 500 gadgets at a price of $5. If Marganet's increases output by 100 gadgets then the price will be decreased to $4 per gadget. Marganet's sells 350 gadgets at a price of $4 and makes a profit of $1400 i.e(350 * $4) and Ray sells 250 gadgets at a price of $4 and makes a profit of $1000 i.e(250 * $4).

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