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The market for qbits is initially competitive and the market demand is: P ? 400 ? 0.4QD . The
combined marginal costs of the firms in the qbit industry are: MC ? 50 ? 0.6Q .
a. Draw the demand, and marginal cost curves. Calculate and show how much these firms will sell and what they will charge.
b. Now a bunch of other firms buy out all of the qbit producers and create a cartel (their combined MC doesn't change). How much will the cartel produce? What price will they charge? (Draw any necessary new curves on your graph above).
c. Is there any DWL associated with the cartel? If so, how much?
d.
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When the price of wheat rises, the quantity of when demanded falls, and when price of wheat falls, the quantity of wheat demanded rises. Therefore, the demand for wheat is not a horizontal line.”
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