#36 &37 Economics 1001 Final Exam Version A Fall 2019 Scenario 3, Colluding Companies: Consider that Carol's Cobs and Tommy Toxi are the only providers of transportation from a remote hillside community to the nearest town 30 miles away. The graph below shows the demand for a return trip to town. Assume that neither firm has any start-up cost, so marginal cost equals average total cost for each firm. MC= ATC MR 0 10 20 40 36. Refer to Scenario 3, Colluding Companies: Consider that Carol's Cab and Tommy Taxi agree to form a cartel and divide the number of return trips evenly. How much profit will each firm make? a) $80. b) $120. (C) $160. d) $400 37. Scenario 3, Colluding Companies: Consider that Carol's Cob and Tommy Toxi agree to form a cartel and divide the number of return trips evenly. However, Tommy Taxi breaks the agreement and provides 5 more trips than the agreed amount while Corol's Cob continues to produce the agreed amount. As a result, Tommy Taxi's profit is a) $60. 6) $80 c) $90. d) $150 Version A

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