Question
Suppose there are 6 firms in a market. The Market Demand curve is given by P = 210 -3Q, where Q is the Market output.
Suppose there are 6 firms in a market. The Market Demand curve is given by P = 210 -3Q, where Q is the Market output. The Marginal Cost for each firm is given by MC = 30. There are no fixed costs. Suppose the firms agree to form a cartel and maximize their joint profits. They agree to equally split the total output between them.
Assume the firms each agree to produce 1/6 of the profit-maximizing (monopoly) output. If Firm 1 decides to cheat on the agreement and maximize its own profit, how much output should Firm 1 produce? Round your answer to 1 decimal place.
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