ECON 3951 Study Guide - Market Power, Wisconsin Department Of Transportation, Mississippi Highway 26
Document Summary
In the competitive model, firms enter until the last. In the competitive model, firms enter until the last firm earns zero economic profits. In economic theory, cartels form in order to increase profits above the competitive level. Organized crime in america takes in over forty billion dollars a year and spend very little on office supplies dollars a year and spend very little on office supplies , A very simple (but useful!) first model of a y cartel is that they behave as a monopolist p. An assumption in our competitive model was that firms were price takers p. That is, firms take prices as given to them by the market. A cartel, however, coordinates the decisions of firms. By doing so, it can choose any price quantity pair on the demand curve p. The total revenue to the cartel is: Where p(q) is the inverse demand curve. Let c(q) be the total cost to the cartel for producing.
