1 The graph below shows the demand for nectar in Gardenia.2016128.44080 120 160 200 240 280Quantity per periodPrice24 Suppose that there are only two firms, Ace and Pace, producing nectar, and they decide to act as a cartel (monopoly) and share themarket equally.a. What price and output will maximize their joint total revenue, and what amount is that?Price: $Output:Total joint revenue: $b. In the payoff matrix in table below, show in cell A the amount of total revenue each will receive if they stick to the agreement.AceKeep agreementCell ABreak agreementCell BАce:Ace:КеepagreementPace:Расе:PaceCell cCell DBreakAce:Ace:agreementPace:Расе:c. Suppose that Ace believes that Pace will honour the agreement by maintaining his present output. However, Ace decides to cheatand increase his output by two-third. What will be Ace's and Pace's total revenues? Show Ace's and Pace's results in celI B.d. Now, assume that the positions are reversed and that Pace decides to cheat while assuming that Ace will stick to the agreement.Show Ace's and Pace's resulting revenues in cell C.e. Finally, in cell D show the total revenue of Ace and Pace that would result if they both cheat.

We can find the demand function from the demand curve by using the intercepts

Answered: The graph below shows the demand for…

The graph below shows the demand for nectar in Gardenia. 20 16 12 8. 4 40 80 120 160 200 240 280 Quantity per period Price 24

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

The graph below shows the demand for nectar in Gardenia.
20
16
12
8.
4
40
80 120 160 200 240 280
Quantity per period
Price
24

Suppose that there are only two firms, Ace and Pace, producing nectar, and they decide to act as a cartel (monopoly) and share the
market equally.
a. What price and output will maximize their joint total revenue, and what amount is that?
Price: $
Output:
Total joint revenue: $
b. In the payoff matrix in table below, show in cell A the amount of total revenue each will receive if they stick to the agreement.
Ace
Keep agreement
Cell A
Break agreement
Cell B
Аce:
Ace:
Кеep
agreement
Pace:
Расе:
Pace
Cell c
Cell D
Break
Ace:
Ace:
agreement
Pace:
Расе:
c. Suppose that Ace believes that Pace will honour the agreement by maintaining his present output. However, Ace decides to cheat
and increase his output by two-third. What will be Ace's and Pace's total revenues? Show Ace's and Pace's results in celI B.
d. Now, assume that the positions are reversed and that Pace decides to cheat while assuming that Ace will stick to the agreement.
Show Ace's and Pace's resulting revenues in cell C.
e. Finally, in cell D show the total revenue of Ace and Pace that would result if they both cheat.

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