Construct a table showing the marginal cost of production

Reference no: EM1370058

An illegal cartel has been formed by three leading ready-mix cement suppliers in the local market. Total costs at various levels of service per day are as follows:

Total Cost ($000)
Daily Output
(000 cu. yds.) Ready Mixes, Inc. Concrete ProductsCo. Hard Stuff, Inc.
0 $ 2 $ 3 $ 0
1 12 14 8
2 21 23 17
3 29 30 27
4 36 41 38
5 47 53 50

A. Construct a table showing the marginal cost of production per firm.

B. From the data in part A, determine an optimal allocation of output and maximum profits if the cartel sets Q = 10(000) and P = $10.

C. Is there an incentive for individual members to cheat by expanding output when the cartel sets Q = 10(000) and P = $9?

Reference no: EM1370058

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