Assume That Demand for a Product That Is Produced at Zero

Essay

Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
$$\begin{array} { | l | l | } \hline \text { Quantity } & \text { Price } \\\hline 0 & \$ 36 \\\hline 200 & \$ 33 \\\hline 400 & \$ 30 \\\hline 600 & \$ 27 \\\hline 800 & \$ 24 \\\hline 1000 & \$ 21 \\\hline 1200 & \$ 18 \\\hline 1400 & \$ 15 \\\hline 1600 & \$ 12 \\\hline 1800 & \$ 9 \\\hline 2000 & \$ 6 \\\hline 2200 & \$ 3 \\\hline 2400 & \$ 0 \\\hline\end{array}$$
a.What is the profit-maximizing level of production for a group of oligopolistic firms that operate as a cartel?
b.Assume that this market is characterized by a duopoly in which collusive agreements are illegal.What market price and quantity will be associated with a Nash equilibrium?