A 5-member commodity cartel faces the demand curve: P = 60 - 0.4Q. Each member can produce output at (constant) LAC = LMC = $20 per unit. How much profit does each member make?
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- A 5-member commodity cartel faces the demand curve: P = 60 – .4Q. Each member can produce output at (constant) AC = MC = $20 per unit. How much profit does each member make?Explain the contradictory incentives associated with forming and maintaining cartels.OPEC is a petroleum cartel, a group of oil producing countries whose objective is to coordinate and unify petroleum policies. What type of market structure is a cartel?
- 20. Using two carefully drawn and labeled diagrams, analyze an input cartel. That is, on the left side of the page, draw a diagram for one of the firms, and on the right side, draw a diagram for the labor market. Indicate the equilibrium wage and employment for the market if the labor market is competitive, (WC , LC), and the corresponding outcome for a firm, (WC, lC). Then, explain how the cartel adjusts the wage and employment.Suppose that a price-taker firm has a marginal cost function given by: MC= 20+0.2q. The firm could join a cartel in its industry and agree to a quota of 10 units. The collusion drives the price of the good from $24.55 to $50.00. Suppose that if the firm cheats on the cartel, it has no effect on the price. Calculate the producer surplus of this firm when they cheat on the cartel.In the United States cartels are
- One factor that has prevented the formation of cartels for producers of commodities is that: a) Commodity produces have been able to dominate world markets. b)Production of most commodities is capital intensive. c) The demand for commodities tends to be price inelastic d)Substitute products exist forany commoditiesWhat is the objective of a cartel? joint profit maximization productive efficiency allocative efficiency O individual profit maximizationEvaluate the following statement: "A cartel will put an end to price wars, which is a barbaric form of competition that benefits no one."
- Define cartel in the petroleum industry.Breakdown of a cartel agreement Consider a town in which only two residents, Sean and Yvette, own wells that produce water safe for drinking. Sean and Yvette can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 5.40 0 0 4.95 40 $198.00 4.50 80 $360.00 4.05 120 $486.00 3.60 160 $576.00 3.15 200 $630.00 2.70 240 $648.00 2.25 280 $630.00 1.80 320 $576.00 1.35 360 $486.00 0.90 400 $360.00 0.45 440 $198.00 0 480 0 Suppose Sean and Yvette form a cartel and behave as a monopolist. The profit-maximizing price is $ __________ per gallon, and the total output is __________ gallons. As part of their cartel agreement, Sean and Yvette agree to split production equally. Therefore, Sean's profit is $ __________ , and Yvette's profit is __________ .…The table shows the demand schedule for a particular product. Quantity Price 0 100 300 90 600 80 900 70 1200 60 1500 50 1800 40 2100 30 2400 20 2700 10 3000 0 Suppose the market for this product is served by two firms who have formed a cartel and are colluding to set the price and quantity in this market. If the marginal cost to produce this product is constant at $40 per unit, then what price will the cartel set in this market? a. $40 b. $50 c. $60 d. $70 e. $80