TWEEDLEDEE'S DECISION TWEEDLEDUM'S Price = $12 Price = $11 DECISION TWEEDLEDUM TWEEDLEDUM 49 units, $588 46 units, $552 Price = $12 TWEEDLEDEE TWEEDLEDEE 49 units, $588 55 units, $605 TWEEDLEDUM TWEEDLEDUM 55 units, $605 52 units, $572 Price = $11 TWEEDLEDEE TWEEDLEDEE 46 units, $552 52 units, $572 This is a game-theory question. Tweedledee and Tweedledum form a cartel. At the beginning the cartel charges $12 for the product and each member sells 49 units to earn $588 apiece. Then both of them think of cheating on the cartel deal and cutting the price to $11/unit. Page 3 ECON 101 Principles of Microeconomics Dominican University Lawrence Morgan Describe how this "game" will turn out: will neither cut the price? will one cut the price and the other not? if one cuts the price, what will the other do? will both cut the price? Who will "win" the game? What does this illustrate about the stability of cartels? - (8 points)