Question

Consider the oil-producing countries of A, B, and C. Each has a marginal cost of zero....

Consider the oil-producing countries of A, B, and C. Each has a marginal cost of zero. World demand is given by Q=1204-p. Suppose the three countries form a cartel, and that none of them has an incentive to deviate from the cartel. By how many units lower is the total output of oil under the cartel relative to the Cournot solution?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Now suppose country A imposes a tax t on A's production of q_A to curb...
1. Now suppose country A imposes a tax t on A's production of q_A to curb emissions. Country B, however, is not taxed. A's cost function is now c_A(q_A) = 46q_A, while B's cost function is c_B(q_B) = 4q_B. World demand is P = 99 - Q. The amount of greenhouse gas emissions per unit is still 0.5, such that total world emissions are given by 0.5Q. What are total world emissions after country A enacts a carbon tax? 2....
1. Now suppose country A imposes a tax t on A's production of q_A to curb...
1. Now suppose country A imposes a tax t on A's production of q_A to curb emissions. Country B, however, is not taxed. A's cost function is now c_A(q_A) = 48q_A, while B's cost function is c_B(q_B) = 4q_B. World demand is P = 99 - Q. The amount of greenhouse gas emissions per unit is still 0.5, such that total world emissions are given by 0.5Q. What are total world emissions after country A enacts a carbon tax? 2....
Consider a duopoly with each firm having different marginal costs. Each firm has a marginal cost...
Consider a duopoly with each firm having different marginal costs. Each firm has a marginal cost curve MCi=20+Qi for i=1,2. The market demand curve is P=26−Q where Q=Q1+Q2. What are the Cournot equilibrium quantities and price in this market? What would be the equilibrium price in this market if the two firms acted as a profit-maximizing cartel ((i.e., attempt to set prices and outputs together to maximize total industry profits ))? What would be the equilibrium price in this market...
The Organization of Petroleum Exporting Countries (OPEC), in its heyday, could be considered as a cartel...
The Organization of Petroleum Exporting Countries (OPEC), in its heyday, could be considered as a cartel operating with a fringe of price-taking smaller firms. Suppose the world demand for oil is given by p = 400-Q , with p in dollars per barrel of oil and Q in millions of barrels per month. The fringe marginal cost curve is MCf = 40+0.5Qf (with Qf and MCf also in millions of barrels and dollars per barrel, respectively), and OPEC’s cost of...
Consider two firms, Firm A and Firm B, who compete as duopolists. Each firm produces an...
Consider two firms, Firm A and Firm B, who compete as duopolists. Each firm produces an identical product. The total inverse demand curve for the industry is ? = 250 − (?? + ?? ). Firm A has a total cost curve ?? (?? ) = 100 + ?? 2 . Firm B has a total cost curve ?? (?? ) = 100 + 2??. a. Suppose for now, only Firm A exists (?? = 0). What is the Monopoly...
A firm's total cost of producing Q units of output is C (Q) = 200 +...
A firm's total cost of producing Q units of output is C (Q) = 200 + 50Q. The inverse demand curve for the firm's product is P(Q) = 80-Q, where P denotes the price of the product. a) If the price of the product is set equal to the firm's average, how much will the firm produce? Hint: choose the larger of the two numbers. Show your work. b) If the firm is under marginal cost pricing, how many units...
The market demand function is Q=10,000-1,000p. Each firm has a marginal cost of m=$0.16. Firm 1,...
The market demand function is Q=10,000-1,000p. Each firm has a marginal cost of m=$0.16. Firm 1, the leader, acts before Firm 2, the follower. Solve for the Stackelberg-Nash equilibrium quantities, prices, and profits. Compare your solution to the Cournot-Nash equilibrium. The Stackelberg-Nash equilibrium quantities are: q1=___________ units and q2=____________units The Stackelberg-Nash equilibrium price is: p=$_____________ Profits for the firms are profit1=$_______________ and profit2=$_______________ The Cournot-Nash equilibrium quantities are: q1=______________units and q2=______________units The Cournot-Nash equilibrium price is: p=$______________ Profits for the...
Suppose in the previous problem that Gaston can produce souffles at a constant marginal cost of...
Suppose in the previous problem that Gaston can produce souffles at a constant marginal cost of $5,but Pierre produces souffles for $7. Together, they collude to produce 3 units each. How much profit will each producer earn? What will be the total profit of the cartel? Gaston observes that he is a more efficient pro- ducer than Pierre, and suggests that if they are going to produce 6 units, the cartel's interests are better served if Gaston produces all of...
3. Consider Iran and Iraq and their production of oil and olive oil. Relatively recent OPEC...
3. Consider Iran and Iraq and their production of oil and olive oil. Relatively recent OPEC estimates indicate that in July 2012, Iran produced about 4.1 million barrels of oil per day and Iraq produced about 3.2 million barrels of oil per day, making them the second- and third-largest oil producers in OPEC, behind Saudi Arabia (and the 4th and 7th largest oil producing countries in the world). Suppose that Iran and Iraq both produce barrels of oil and bottles...
Suppose there is only one yoga studio in town. The marginal cost of producing yoga sessions...
Suppose there is only one yoga studio in town. The marginal cost of producing yoga sessions is as follows: MC = 12. The yoga studio faces the following market demand function: Q = 20 − (1/2)P, and marginal revenue MR = 40 − 4Q. 1. Calculate the profit-maximizing price, output, and profit for the yoga studio. 2. Graph the market demand curve, the studio’s marginal revenue and marginal cost curves, indicating profit, price, and quantity at the profit-maximizing level of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT