Final answer:
If the firms form a cartel, they will act like a monopoly with the quantity and price determined by MR = MC. The cartel can earn positive economic profits based on the difference between price and average cost. The total combined quantity and price are specific to the circumstances, and the total combined economic profit can be positive.
Step-by-step explanation:
If the firms form a cartel, they will act like a monopoly, choosing the quantity of output where MR = MC. Drawing a line from the monopoly quantity up to the demand curve shows the monopoly price. Assuming that fixed costs are zero, and with an understanding of cost and profit, we can infer that when the marginal cost curve is horizontal, average cost is the same as marginal cost. Thus, the cartel will earn positive economic profits equal to the area of the rectangle, with a base equal to the monopoly quantity and a height equal to the difference between price (on the demand above the monopoly quantity) and average cost.
Regarding the total combined economics profit made by the firms, it will depend on the specific quantities and prices set by the firms. However, from the given information, it is stated that the total economic profit made by all of the firms combined is $0, meaning that the firms are not earning any profit when they compete. When the firms form a price-fixing cartel to maximize total profit, they will produce a total combined quantity that maximizes profit, which can vary depending on the specific circumstances. The price set by the cartel will also depend on the specific circumstances. The total combined economic profit made by the firms when they form a price-fixing cartel will also vary depending on the quantities produced and prices set, but it can be positive, as mentioned earlier.