Assume that a six-firm cartel supplies 500 million units of Whatailsya energy drink at a price of $5.00 per unit. Each firm supplies an equal share of the cartel's output. One firm decides to cheat and supplies 50 million extra units, causing the price of Whatailsya to decrease to $4.50 per unit. Assuming that the loss due to the fall in price is evenly spread across all firms in the cartel, what is the net gain for the cheating firm, in millions of dollars? Round your answer to the nearest million. net gain: $ million

Assume that a six-firm cartel supplies 500 million units of Whatailsya energy drink at a price of $5.00 per unit. Each firm supplies an equal share of the cartel's output. One firm decides to cheat and supplies 50 million extra units, causing the price of Whatailsya to decrease to $4.50 per unit. Assuming that the loss due to the fall in price is evenly spread across all firms in the cartel, what is the net gain for the cheating firm, in millions of dollars? Round your answer to the nearest million. net gain: $ million

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 3P

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