Table: Three-Country Oil ProductionTotal Market Output (unit…
Table: Three-Country Oil ProductionTotal Market Output (units)Market Price600$90800801,000701,200601,400501,600401,80030Suppose that three countries are engaged in oil production. For simplicity, assume zero costs so that revenue equals profit. If the countries create a cartel and agree to mimic monopoly-like behavior, what level of output will each firm produce?
Read DetailsTable: Three-Country Oil ProductionTotal Market Output (unit…
Table: Three-Country Oil ProductionTotal Market Output (units)Market Price600$90800801,000701,200601,400501,600401,80030Suppose that three countries are engaged in oil production. For simplicity, assume zero costs so that revenue equals profit. Assume that the three countries have already formed a cartel, and are collectively producing at the profit maximizing price and quantity. Country A decides to cheat on the cartel agreement by producing 200 more barrels than the other two countries. What is the new market price when country A cheats on the agreement?
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