The daily marginal cost of producing a can of beer is constant and equals $0.40/ can. Marginal cost equals average total cost for each firm.Suppose that the two firms divide the output evenly.Place black point on the graph to indicate the profit-maximizing price and combined quantity of output of Stargell and Schmidt choose to work together.

0.90 Demand Monopoly Outcome E PRICE (Dollars per can) MC = ATC 20 190 200 QUANTITY (Cans of beer) When they act as a profit-maximizing cartel, each company will produce | zans and change S per can. Given this nformation, each firm earns = daily profit off so the daily total industry profit in the beer market is | S Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume the two companies form a carcal and decide to work together Boch firms initially agree to produce half the quantity that maximizes total industry profit. Now, suppose chat Stargell decides to break the collusion end increase ies output by 50's, while Schmidt continues to produce the amount set under the collusive agreement. Stargell's deviation from the collusive agreement causes the price of e can of per can. Stergel's profit s imlet's profit is now noustry profit when us beyond the collu