The market demand for good X per month is Q=4800-320P. Production requires no fixed cost but only a constant marginal cost of $4.

(a) With the aid of a diagram, calculate the monthly output, price and profit for the whole industry if the market is perfectly competitive. (3 marks)

(b) Now suppose that all firms in the market form a cartel and agree on a price and total industry output level similar to a monopoly. Calculate the monthly output, price and profit for the industry as a whole. (4 marks)

(c) Now suppose that a businessman realizes the difficulty of maintaining discipline of the cartel and considers taking over all the firms in the industry to form one firm - a monopoly. What is the maximum total amount that he should spend on the take-over attempt? Assume that he is not able to practice price discrimination, he expects he can maintain the same economic performance forever and the interest rate is 8% per annum. (3 marks)