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5. Cartel versus competitive outcome A few rival firms provide Internet services in the United States. Because the firms must have the appropriate technology, hardware,

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5. Cartel versus competitive outcome A few rival firms provide Internet services in the United States. Because the firms must have the appropriate technology, hardware, data connections, and customer service to maintain their businesses, there are economies of scale. The market for Internet service is best characterized as V The following graph shows the market demand conditions and longrun costs of production for individual rms in the market for Internet service. Assume all Internet service providers produce an identical product and face identical cost curves. Suppose all Internet service providers successfully coordinate supply decisions to maximize profit as a cartel. Place the green point (triangle symbol) on the graph to indicate the quantity of monthly subscriptions the cartel will supply and the price it will charge. Dashed drop lines will automatically extend to both axes. 5. Cartel versus competitive outcome A few rival firms provide Internet services in the United States. Because the firms must have the appropriate technology, hardware, data connections, and customer service to maintain their businesses, there are economies of scale. The market for Internet service is best characterized as V a price-taker market he market demand conditions and longrun costs of production for individual rms in the market for Internet service. a monopoly providers produce an identical product and face identical cost curves. ' a pricesearcher market . providers successfully coordinate supply decisions to maximize profit as a cartel. an oligopoly . gie symbol) on the graph to indicate the quantity of monthly subscriptions the cartel will supply and the price it will charge. Dashed drop lines will automatically extend to both axes. 100 4 80 Cartel Outcome 60 Competitive Outcome PRICE (Dollars per subscription) 40 LRATC 20 MR Demand 0 200 400 600 800 1000 QUANTITY (Thousands of monthly subscriptions) Now suppose that some cartel members their prices in order to increase market share. increase Use the purple point (diamond symbol) o graph to indicate the price and quantity that will prevail in the long run if all firms in the oligopoly lower compete with one another.6. Rent seeking The following graph shows the demand, marginal revenue (MR), and marginal cost (MC) curves for a singleprice monopolist that produces a drug that helps relieve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to indicate the monopoly outcome such that the dashed lines reveal the protmaximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the prots earned by the monopolist. /'\\ K3; a: Monopoly Outcome Ti? 10 o E 5 Monopoly Prots 3 \"I

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