Respuesta :
Answer:
The net gain for the firm cheating the cartel is US$ 183 million (rounding the answer to the nearest million).
Explanation:
1. Let's review all the information provided for solving this case:
Number of firms that supply Whatailsya energy drink = 6
Amount of production of the cartel of six firms = 500 million units
Price of the energy drink = US$ 5
Amount of production of the firm that decided to break the cartel = 50 million extra units
Price after the extra production is sold = US$ 4.50
2. Let's find the individual production of each firm before and after the 50 million extra units and the net gains for the cheating firm.
Individual production of each firm of the cartel = Amount of production of the cartel/Number of firms
Individual production of each firm of the cartel = 500 million units/6
Individual production of each firm of the cartel = 83.33 million units
Individual sales of each firm before the 50 million extra units = Individual production * Price of the energy drink
Individual sales of each firm before the 50 million extra units = 83.333 million * 5
Individual sales revenue of each firm before the 50 million extra units = US$ 416.666 million
New production amount of the firm cheating the cartel = 83.333 + 50
New production amount of the firm cheating the cartel = 133.333 million units
Price of the energy drink after the extra production is sold = US$ 4.50
New sales revenue of the firm cheating the cartel = New production amount * Price of the energy drink after the extra production is sold
New sales revenue of the firm cheating the cartel = 133.333 million * 4.50
New sales revenue of the firm cheating the cartel = US$ 600 million
Net gain of the firm cheating the cartel = New sales revenue of the firm cheating the cartel - Individual sales of each firm before the 50 million extra units
Net gain of the firm cheating the cartel = 600 million - 416.666 million
Net gain of the firm cheating the cartel = 183.333 million
Net gain of the firm cheating the cartel = US$ 183 million (rounding the answer to the nearest million)
The income obtained from the sale of items is reduced from the amount spent on their acquisition and manufacturing to determine a company's net gain or loss. The terms "net losses" and "net gains" are frequently used to keep track of investment profits and losses.
COMPUTATION:
[tex]\text{Share of each firm} = \frac{500}{7} \\\\ = 71.43 \text{million units}[/tex]
[tex]\text{Initial revenue for each firm} = 71.43 \text{ x } 5 \\\\= $357.15 \text{million}[/tex]
[tex]\text{Increased revenue of the cheating firm} = 71.43 + 50 \\\\= 121.43 \text{million units}[/tex]
[tex]\text{Total revenue of the firm that cheated} = 121.43 \text{ x } 4.50 \\\\= $546.44 \text{million}[/tex]
[tex]\text{Increase in revenue for the cheating firm} = 546.43 - 357.15 \\= 189.28 \text{million}[/tex]
[tex]\text{Total Initial Industry revenue} = 500 \text{ x } 5 \\\\= $ 2500 \text{million}[/tex]
[tex]\text{Decreased total Industry venue after cheating} = 550 \text{ x } 4.5 \\\\= $2475 \text{million}[/tex]
[tex]\text{Amount of decreases in total revenue} = 2500 - 2475 \\\\= 25 \text{million}[/tex]
[tex]\text{Amount of decreases in revenue of each firm} = \frac{25}{7}\\\\= 3.57 \text{million}[/tex]
[tex]\text{Net revenue gain for the cheating firm} = 189.28 - 3.57 \\\\= 185.71 \text{ or,} 186 \text{million}[/tex]
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