(table is attached) Suppose the market for high end kitchen utensils is dominated by two firms named Pete's Patented Peelers and Pat's Patented Parers. The demand for the entire market is seen in the following table. Assume that after incurring $1,000 of fixed costs in setting up production the Marginal Cost of producing one more unit for either of these producers is $5. First, find the price and quantity combination that would maximize industry profits if Pete and Pat essentially behaved as a cartel. Assuming they split the market evenly, what is each seller's quantity produced and what is each seller's profit? It may help to fill in columns for total and marginal revenue on your own.

Show that if Pete increases production by 100 utensils he will earn more profit, assuming that Pat sticks with the quantity you found above, which is half of what would be produced if the industry were controlled by a monopoly.

next, calculate what profit each would make if Patalsocheats by producing 100 more utensils. Assuming that they both calculate that the other will "cheat" and produce at this higher amount, would either have an incentive to further overproduce? What would happen to either seller's profit by producinganother100 more units?If cheating beyond this point will drive down one's own profit, and thus is not in anyone's interest, could this point be called a "Nash" equilibrium? Explain.

JUI 26 at 11:59pm 22 days Whether oligopoly is analyzed from a game theoretic framework or modeled as a cartel, the incentive and temptation to "cheat" is common to all of these app mounts to overproducing in an effort to gain profits. The problem. at least for the oligopolists, is that each seller is thinking along these same lines, and so all Let's look fixed costs his with a numerical example. Suppose the market for high end kitchen utensils is dominated by two firms named Pete's Patented Peelers and Pat evenly. wh up production the Marginal Cost of producing one more unit for either of these producers is $5. First, find the price and quantity combinat ch seller's quantity produced and what is each seller's profit? It may help to fill in columns for total and marginal revenue on your own. Price of Utensil Quantity of Utensils demanded Total Revenue Marginal Revenue $30 $20 $15 $10 Of course we know that U. rust law prohibits this type of cooperation. and it is also tempting for each individual seller to "cheat" a bit and overproduce in an effort to that Pat sticks with the quantity you found above, which is half of what would be produced if the industry were controlled by a monopoly. Next. calculate what profit each would make if Pat also cheats by producing 100 more utensils. Assuming that they both calculate that the other will "cheat" and produce at this seller's profit by producing another 100 more units? If cheating beyond this point will drive down one's own profit. and thus is not in anyone's interest, could this point be called Please submit your responses to your instructor with a Word document file upload. Generic Assignment Rubric Criteria Ratings Assignment Tasks 30 pts 10 pts Basic Fails to address Purposefully acercasts antesuper directorsin the Exemplary Purposefully addresses all tasks on Proficient Purposefully addresses most tasks or directions in the in the assignment. assignment. directions In the assignment assignment. Needs further work