Q1. Assume a cartel that consists of two firms has determined its profit-maximizing level of output and must now decide how to allocate total output between the two firms. Assuming firm A''s marginal costs are less than firm B''s marginal costs, should firm A produce a smaller share of total output than firm B? Explain.
Q2. In oligopolistic markets, price competition strategies are usually destructive. The text''s discussion of the airline industry, the soft drink industry, and the doughnut industry reveals a common theme when it comes to the types of competitive practices firms in each industry engage in to avoid price competition. Explain how they compete for market share and what advantage does this type of competition offer firms? Provide another example from the UAE or any other economy explain how the firms you chose compete for market share.