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The table below shows the market demand for eggs in the econamy of fobbin. The revenue maximizing output in the market is eggs. At this
The table below shows the market demand for eggs in the econamy of fobbin. The revenue maximizing output in the market is eggs. At this level af output, the market price would be S Suppose that there are only two firms, Drake and Graysen, producing eggs and they decide to act as a cartel and (i.e, each firm has excetly onehalf of total soles). A. In the payoff matrix below, show in cell A the amount of total revenue each will receive if they both stick to the agreement. Remember that they are sharing the market. 8. Suppose that Grayson believes that Orake will honeur the agreement by maintaining his present cutput. Howerer, Grayson decides to cheat and increase his dutput by 40%. What will be Drake and Graysor's total revenue esch? Complete cell 8 . Hint: consider how the action by Graysan will affect the market by looking at the market table above. C. Naw, assume that the positiuns are reversed and that Drake decides to cheat while assuming that Grayson will stick to the agreernent. Complete cell C. D. Finally, in cell D, show the tatal revenue of Graysen and Drake that would result if they both cheat. E. The cuteme in Cell A is the joint uutcome for the two frms. F. The cuteome in Cell D is the joint autcome for the two firms
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