19 7 points (Table: Oil Production) Consider the table below which gives the total market output and market price for oil. Assume that there are three firms in the market. Refer to the table for scenarios (a) through (c). Assume that the marginal cost of oil production equals zero. Total Market Output Market Price 600 90 800 80 1,000 70 1.200 60 1.400 50 1,600 40 1.800 30 (a) Suppose in the absence of collusion, the market price for oil is $30. How much profit would each firm make? (b) Suppose that all three firms decide that they are tired of competing, and that they want to maximize their joint profit. If these firms act like a cartel, what market price should the firms set for oil? How many units will each firm produce under this cartel price? By how much will this cartel price increase individual profit from what they were making in part (a)? (c) Suppose that one of the firms decides that it will cheat. If the cheating firm doubles their production from part (b) what will the new market price be? By how much will cheating increase this firm's profit from what they were making in part (b)? By how much will the profit of the non-cheating firms decrease from what they were making in part (b)