N4

Suppose that there are 10,000 chocolate Easter egg firms all making exactly the same chocolate egg and producing at a total cost of 300Q + 50Q^2 where Q equals the number of chocolate eggs produced per year. All firms are price takers and the yearly market level demand for chocolate eggs is represented by Q = 45,000 - 50P

1. What price and quantity correspond to the market equilibrium?
2. How much does each individual firm produce in this equilibrium?
3. The 10,000 identical firms collude to act as a monopoly. How does this change your answers to part a)?
4. How much do the firms gain and consumers lose due to this collusion?
5. What is the deadweight loss to society due to this collusion?