Scenario 4: Consider a market with three firms: Market demand is given by P= 300- Q. The three firms behave independently, but they agree to split market demand such that each firm captures one-third. The three firms have zero fixed costs, but MC1 = 20 + 2q1, MC2 = 40 + 4q2, & MC3 = 60 + 6q3.

8) Refer to Scenario 4. Firm 1 maximizes profits atq1 = ______; and P1= $______.

9) Refer to Scenario 4. Firm 2 maximizes profits atq2 = ______; and P2= $______.

10) Refer to Scenario 4. Firm 3 maximizes profits atq3 = ______; and P3= $______.

11) Refer to Scenario 4. When the three firms maximize profits independently, then1 = $______;2 = $______; &3 = $______.

12) Refer to Scenario 4. If the three firms decide to form a cartel, then when the cartel maximizes profits, Qc= ______; and Pc= $______.

13) Refer to Scenario 4. After the cartel, firm 1 makes1= $______; firm 2 makes2 = $______; and firm 3 makes3 = $______.

14) Refer to Scenario 4. After the cartel, which firms are better-off or worse-off?

15) Refer to Scenario 4. After the cartel, joint profits have increased/decreased; from $______; to $______.

16) Refer to Scenario 4. To sustain the cartel, profit pooling is necessary/not necessary, such that which firm(s) would have to give minimum side-payment(s) of $------ to this/these firm(s).

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