Suppose there are 7 firms in an industry. The Market Demand Curve is given by P = 258 – 3Q. Each firm has MC = 6 and FC = 0. Suppose the firms form a Cartel and agree to maximize the joint profits, split the profit-maximizing output equally and split the profits equally.

A) How much output will each firm produce?

q_i = _________________ i = 1,7

B) How much profit will each firm make?

P_I = _________________ i = 1,7

C) Now suppose that Firm 1 decides to cheat on the agreement. Assuming the other 6 firms each produce the quantity given in A), write the equation for the residual demand that faces Firm 1.

Q^R = _________________________

D) If Firm 1 expects Firm 2 to produce the amount of output in A), how much output should Firm 1 produce to maximize their profit?