Assume the Hand Tool Manufacturing Industry Trade Association recently published the following estimates of demand and supply

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Assume the Hand Tool Manufacturing Industry Trade Association recently published the following estimates of demand and supply relations for hammers:

QD = 60,000 - 10,000P (Demand),

QS = 20,000P(Supply).

A. Calculate the perfectly competitive industry equilibrium price/output combination.

B. Now assume that the industry output is organized into a cartel. Calculate the industry price/output combination that will maximize profits for cartel members.

C. Compare your answers to parts A and B. Calculate the price/output effects of the cartel.

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Managerial Economics

ISBN: 978-0324588866

12th edition

Authors: Mark Hirschey

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Question Posted: Feb 13, 2015 09:54 AM

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Assume the Hand Tool Manufacturing Industry Trade Association recently published the following estimates of demand and supply

Question:

Step by Step Answer:

A The industry equilibrium price is determined by setting Q D Q S 60000 10000P 20000 P P 2 At P 2 th...View the full answer

Managerial Economics

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