7. Deviating from the collusive outcome Stargell and Schmidt are brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can 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 each firm. Suppose that Stargell and Schmidt form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Stargell and Schmidt choose to work together. 2.00 1.80 Monopoly Outcome 1.60 Demand 1.40 1.20 100 PRICE (Dollars per can) MC = ATC 0.80 0.60 0.40 0.20 MR 90 180 270 360 450 540 630 720 810 900when they act as a prot-maximizing cartel, each company will produce \\:| cans and charge per can. Given this information, each firm earns a daily profit o_ , so the daily total industry prot in the beer market is . Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total prot in the market. Again, assume the two companies form a cartel and decide to work together: Both rms initially agree to produce half the quantity that maximizes total industry prot. Now, suppose that Stargell decides to break the collusion and increase its output by 50%, while Schmidt continues to produce the amount set under the collusive agreement. Stargell's deviation from the collusive agreement causes the price of a can of beer to V to per can. Stargell's prot is now _ while Schmidt's prot is now . Therefore, you can conclude that total industry profit V when Stargell increases its output beyond the collusive quantity