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Q. Assume there are 100 identical firms in an initially competitive market. Market demand is given by P=10-Q/200 and market provide by P= 1+Q/200. Calculate the competitive equilibrium cost P, the industry output Q and firm output q. If the 100 firms formed an effective cartel, illustrate what would be the cost -quantity solution P1, Q1 for maximum aggregate profit? Assume which the industry supply curve is simply the horizontal sum of the firms' marginal cost curves). At this cost, to illustrate output quota q1 would the typical firm have to be limited? Explain how much would it like to produce?
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