Suppose Clancy and Eileen form a cartel and behave as a monopolist. The profit-maximizing. price is $gallons. As part of their cartel agreement, Clancy and Eileen agree to split production equally. Therefore, Clancy's prois$Suppose that Clancy and Eileen have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopolyquantity. Then one night before going to sleep, Clancy says to himself, "Eileen and I aren't the best of friends anyway. If I increase my production to45 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow."After Clancy implements his new plan, the price of waterClancy's profit becomes $Fand Eileen's profit is $81°FSunnyAfter Eileen increases her production, Clancy's profit becomes $sum of the profits of Clancy and Eileen) is now $O TrueO FalseBecause Clancy has deviated from the cartel agreement and increased his output of water to 45 gallons more than the cartel amount, Eileen decidesthat she will also increase her production to 45 gallons more than the cartel amount.F2and Eileen's profit becomes $F3True or False: Based on the fact that both Clancy and Eileen increased production from the initial cartel quantity, you know that the output effect wassmaller than the price effect at that quantity.:0+F4to $63HF5DOLF6MEileen's profit becomes $iper gallon. Given Eileen and Clancy's production levels,F7Mper gallon, and the total outputF8=&F9, and total profit (theF10F11F12 e ap sep 0ja ajalooPurwas ap oConsider a town in which only two residents, Clancy and Eileen, own wells that produce water safe for drinking. Clancy and Eileen can pump and sellas much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water.TabCaps LockPrice(Dollars per gallon)6.005.505.004.50Escis81°FSunny4.003.503.002.502.001.501.00!0.5007QAQuantity Demanded(Gallons of water)04517F28-@Suppose Clancy and Eileen form a cartel and behave as a monopolist. The profit-maximizing price is $gallons. As part of their cartel agreement, Clancy and Eileen agree to split production equally. Therefore, Clancy's profit is-CVE2W90135S.180225270315360405450495540F30+#M3Total Revenue(Dollars)0$247.50$450.00$607.50$720.00$787.50$810.00$787.50$720.00$607.50EF4BO$450.00$247.500D$4F5RF%5F6DTF7^6G4-YFBJ+&7per gallon, and the total outputHF9U*8OJF101-990(9MF11KO)0F122PFnLock¡4) D11:04 AM6/25/2022Prt Sc11ABackspaceMESA-ZShiftEnter(1

Cartels are a type of oligopoly since they include various firms working in a conspiracy to limit…

Suppose Clancy and Eileen form a cartel and behave as a monopolist. The profit-maximizing. price is $ gallons. As part of their cartel agreement, Clancy and Eileen agree to split production equally. Therefore, Clancy's pro and Eileen's profit is $ is Suppose that Clancy and Eileen have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Clancy says to himself, "Eileen and I aren't the best of friends anyway. If I increase my production to 45 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow." After Clancy implements his new plan, the price of water Clancy's profit becomes $ to $ and Eileen's profit becomes $ After Eileen increases her production, Clancy's profit becomes $ sum of the profits of Clancy and Eileen) is now $ per gallon, and the total output per gallon. Given Eileen and Clancy's production levels, Because Clancy has deviated from the cartel agreement and increased his output of water to 45 gallons more than the cartel amount, Eileen decides that she will also increase her production to 45 gallons more than the cartel amount. Eileen's profit becomes $ and total profit (the

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 3SCQ: Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation...