Suppose there are only two ice cream shops, Bob's Ice Cream and Joe's Ice Cream, in Boston, Mass. These two ice cream shops produce identical ice cream cones. Market demand for ice cream cones in Boston is given by Q = 75 - P, where Q is the quantity of ice cream cones and P is the price. Suppose that total costs for Bob's Ice Cream are given by TCBob = 0.1Q2Bob and total costs for Joe's Ice Cream are given by TCJoe = 5QJoe.
If the two firms compete and choose output such that price equals marginal cost, what is the profit-maximizing level of output for Bob's Ice Cream? Blank 1
And what is the profit-maximizing level of output for Joe's Ice Cream? Blank 2
If the two firms compete and choose output such that price equals marginal cost, what is the market price? Blank 3
What is the joint profit for the two firms when they price compete? Blank 4
If the two firms instead secretly collude and behave as a cartel, what is the profit-maximizing level of output for Bob's Ice Cream? Blank 5
And what is the profit-maximizing level of output for Joe's Ice Cream? Blank 6
If the two firms secretly collude and behave as a cartel, what is the market price? Blank 7
What is the joint profit for the two firms when they secretly collude and behave as a cartel?