6. The cartel and the problem of cheating Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The dably marginal cost (MC) of producing a ean of beer is constant and equals $0.80 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for esch Firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evanty. (Note: This is only for convenience; nothing in this model requires that the two companies thust equall share the output.) Place the black point (plus symbol on the following graph to indicate the profit-maximging price and cambined quanbty of outout if Mays and Mccovey choose to wark together Manopoly Outcome When they act as a profit-maximizing cartel, each company will produce cans and charge information, esch firm earns a daly profit of , so the dally total industry praht in the beer market is Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume the two companies form a cartel and decide to work together, Doth firms initialy agree to produce haif the quantity that maximires total industry profit. Now, suppose that Mays decides to break the collusion and increape its output by sow, while McCovey continues to produce the amount set under the collusive agreement. Mays's deviation from the collusive agreement causes the price of a can of beer to , while McCovtry profitis now Therefore, you can conclude that total industry profit Mays increases its output beyond the coliusive quaneity