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A commodity market is characterized by the following equations:
Demand: P=70-(QD)
Supply: P=10+2(QS)
1. What are the competitive price and efficient quantity?
2. Assume that firms in this market manage to form a cartel to stabilize prices and that the total cost of producing the good is TC=20+10 (quantity)+2(quantity)(quanity)
a. What is the optimum price for the cartel? b. What is the profit for the cartel?
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