Somewhere in the tundra of South Dakota there is a small town with a river running through it (sounds like a good name for a book & movie) which divides the town in half. Each side of the town has a family (the Hatfields and the McCoys) which own seed company's. The McCoys found out the Hatfields were going to open a bar on their side of town. The Hatfields arrange a meeting with the McCoys to tell them they will open a bar on their side of the town. The meet and make an arrangement to set up a market-sharing cartel. The McCoys will open their bar on their side of the river and the Hatfields will do the same on their side. The market share is 50%/50%. They set up a sub-committee to determine the output, Q*, and price, P*, for the cartel. The demand curve facing the total market is (the market demand curve):

Q= 240 - 10*P

Rearranging => P = 24 - 0.1*Q and MR = 24 - 0.2*Q

MC = 0.2 for both the Hadfields and McCoys

Note: Industry MC = MCi = MCH + MCM

ATC = 0.05*Q

a. Is this market-sharing arrangement a monopoly? Explain.

b. What is the cartels profit maximizing output, Q*, and price, P*? c. What is the Hadfield and McCoys cartel's profit?