Problem: The Chilean Fruit Growers Association estimates the following market supply and demand curves for fruit:
QS = 125,000P
QD = 200,000 - 50,000P
Where Q is the daily output in pounds and P is the price per pound.
Q1. Determine the price and quantity that would result under competitive conditions.
Q2. The Chilean Fruit Growers are trying to organize a cartel among growers in their region. Assuming that all growers participate in the cartel, what price and quantity should the cartel set?
Q3. The Growers Association would like to give growers and idea of the benefits available from the cartel. How significant are the advantages from the cartel?