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Artichoke production in Turkey is done by a cartel of 3 firms. Their marginal cost per pound of artichokes is $30. Demand is given by:

Artichoke production in Turkey is done by a cartel of 3 firms. Their marginal cost per pound of artichokes is $30. Demand is given by: Q_D=21 - 0.5P

A. What price do consumers pay? What is the quantity produced by each cartel member?

B. Suppose one firm in the cartel cut their prices to $32. What additional quantity would they sell?

C. Briefly explain why such price-cutting behavior is moral hazard from the cartel's perspective.

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