use the following information to work problems 3 to 5 isolated island has two taxi c 1572091

Use the following information to work Problems 3 to 5. Isolated Island has two taxi companies, one owned by Ann and the other owned by Zack. Figure 1 shows the market demand curve for taxi rides, D, and the average total cost curve of one of the firms, ATC

. 3. If Ann and Zack produce the same quantity of rides as would be produced in perfect competition, what are the quantity of rides, the price of a ride, and the economic profit of Ann and Zack? Would Ann and Zack have an incentive to collude and raise their price? Explain why or why not.

4. If Ann and Zack form a cartel and produce the same quantity of rides as would be produced in monopoly, what are the quantity of rides, the price of a ride, and the economic profit of Ann and Zack? Would Ann and Zack have an incentive to break the cartel agreement and cut their price? Explain why or why not

 5. Suppose that Ann and Zack have two strategies: collude, fix the monopoly price, and limit the number of rides or break the collusion, cut the price, and produce more rides. Create a payoff matrix for the game that Ann and Zack play, and find the Nash equilibrium for this game if it is played just once. Do the people of Isolated Island get the efficient quantity of taxi rides?