What are the quantity of rides

Reference no: EM131297850

Isolated Island has two taxi companies, one owned by Ann and the other owned by Zack. Figure 1 shows the market demand curve for taxi rides, D, and the average total cost curve of one of the firms, ATC.

If Ann and Zack form a cartel and produce the same quantity of rides as would be produced in monopoly, what are the quantity of rides, the price of a ride, and the economic profit of Ann and Zack? Would Ann and Zack have an incentive to break the cartel agreement and cut their price? Explain why or why not.

Reference no: EM131297850

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