Reference no: EM132410839

Demand for ultra-extra-virgin olive oil is given by P = 140 - 0.1Q. With the unfortunate demise of the Unico family business, this industry is now supplied by only two firms. The De Cecco family business operates with total costs CD = 20QD while the Bernoulli family business has total costs CB = 20QB. Total quantities supplied are Q = QD + QB. Calculate industry price, quantity, firm quantity supplied and firm profits under each of the three scenarios below. No diagram is required.

1. The families act as Cournot Duopolists and engage in strategic quantity setting.
2. The firms form a Stable Cartel called the Great Canadian Olive Oil Consortium.
3. The De Cecco family cheats on the Bernoulli family and violates the cartel agreement.