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Suppose that the market demand for mountain spring water is given as follows: P = 1200 - Q Mountain spring water can be produced at

Suppose that the market demand for mountain spring water is given as follows:

P = 1200 - Q

Mountain spring water can be produced at no cost, so MC=0.

Suppose that there is only one firm in the market.Marginal revenue for a monopolist is given by MR = 1200 - 2Q.

What is the profit maximizing price in this market?

How much profit could each firm earn if they successfully formed a cartel?

And then Calculate firm 1's profit if they optimally deviate from the cartel agreement, assuming that firm 2 continues to produce their share of the cartel quantity.

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