Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
|a.||What is the profit-maximizing level of output for a group of oligopolistic firms that operate as a cartel? (4 marks).|
|b.||Assume that this market is characterized by a duopoly in which collusive agreements are illegal. What market price and quantity will be associated with a profit-maximizing Nash equilibrium? (5 marks)|
|c.||Describe the output and price effects that influence the profit-maximizing decision faced by a firm in an oligopoly market. How does this differ from output and price effects in a monopoly market? (4 marks).|