Oligopoly - End of Chapter Problem The market for olive oil in New York City is controlled by two families, the Sopranos and the Contraltos. Both families will ruthlessly eliminate any other family that attempts to enter the New York City olive oil market. The marginal cost of producing olive oil is constant and equal to $40 per gallon. There is no fixed cost. The accompanying table gives the market demand schedule for olive oil. a. Suppose the Sopranos and the Contraltos form a cartel. For each of the quantities given in the table, calculate the total revenue for their cartel and the marginal revenue for each additional gallon. Use that information to answer the following questions. How many gallons of olive oil would the cartel sell in total and at what price? The two families share the market equally (each produces half of the total output of the cartel). How much profit does each family make? Total output by the cartel: gallons b. Uncle Junior, the head of the Soprano family, breaks the agreement and sells 500 more gallons of olive oil than under the cartel agreement. Assuming the Contraltos maintain the agreement, how does this affect the price for olive oil and the profits earned by each family? Total output by the cartel: Soprano family's profit: $ gallons Contralto family's profit: \$ c. Anthony Contralto, the head of the Contralto family, decides to punish Uncle Junior by also increasing his family's sales by 500 gallons. How much profit does each family earn now? Total output by the cartel: gallons Price per gallon: $ Each family's profit: $