The diagram illustrates a firm’s marginal and average cost curves. The firm joins a collusive agreement with the other firms in the industry. It is decided that every firm will set the same price, OP, and will limit its output to a production quota fixed by the industry cartel. The firm is given a production quota, Oq. The firm chooses to cheat in order to maximise its profits. What is the short-run rise in its profits?
- APGKL
- BPHJL
- CPHJL minus PGNM
- DPGKL minus LKNM