The diagram displays a firm’s marginal cost and average cost curves. The firm joins a collusive arrangement with other firms in the industry. Under the agreement, every firm will set the same price, OP, and will keep output at the production quota determined by the industry cartel. The firm is given a production quota, Oq. To maximise profits, the firm chooses to cheat. What is the resulting short-run rise in profits?
- APGKL
- BPHJL
- CPHJL minus PGNM
- DPGKL minus LKNM