Please Help with Chpt 17: Breakdown of Cartel agreement

Quantity Demanded Total Revenue [Dollars per gallon) (Gallons of water) 5.00 350 405 450 0.50 $247.50 ese Kenji and Lucia form a cartel and behave as a monopolist. The profit-maximizing pres gallon, and the total output gallons. As part of their cartel agre Kenji and Lucia agree to split production equally. Therefore, Kenji's pr . and Lucia's profit is uppose that Kenji and Lucis have bean successfully a cartel. They cach charge the monopoly price and sell hall of the monopet quantity. Then one night before going to sleep. Kenji says to himself. "Lucia and I aren't the best of friends anyway. If I increase my production to 45 ens more than the cartel amount, I can increase refit even though her profit goes down. I wil do that starting tomorrow." After Kenji implements his new plan, the price per gallon. Given Lucia and Kerji's production Kenji's profit becomes Because Kenji has deviated from the cartel ag creamed his output of mat = cartel amount, has d that she will also inc her production to 45 gallons more than the cartel a After Lucia increases her production, Kenji's profit becom profit becomes . and total profit (the sum of the profits of Kenji and Lucio) is now (5 True or False: Based on the fact that both Kenji and Lucia increased production from the initial cartel quantity, you know that the output =fleet was larger than the price effect at that quantity. O Tru= False Kenji and Lucis have each cheated on their cartel agreement and increased production by 45 gallons more than the cartel amount. However they both realize that if they continue to in crease output beyond this amount, they'll each suffer a decrease in profit. ( To see this for yourself, consider Kenji's profit when he produces 90 gallons more than the cartel amount compared to his profit when he produces 45 gallons more than the cartel smount.) Neither Kenji nor Lucis has an ince ass output further, have an incentive to decrease output, This outcome is an example