1. Draw a world demand curve for bananas. A cartel, OBEC, the Organization of Banana Exporting Countries, is founded in an attempt to drive up the world price of ba- nanas. Add a marginal revenue curve corresponding to the demand curve and a marginal cost curve representing the sum of the marginal cost curves of the cartel members. Identify the quantity that would maximize profits for the industry and the price the cartel would charge.
2. Draw a downward-sloping demand curve and the corresponding marginal revenue curve for a monopolistically competitive firm. Add a marginal cost curve and an average total cost curve so that the firm is in long-run equilibrium. Identify the price it would set and the quantity it would choose to produce.