ENGR.ECONOMIC ANALYSIS
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ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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9) Explain the difference between a cartel and tacit collusion. Is tacit collusion illegal in the United States? Explain.
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- Why has the Federation of Quebec Maple Syrup Producers been a successful cartel in Quebec, Canada? Has the relatively weak government structure of Quebec allowed for this organizations success?arrow_forwardCoke and Pepsi dominate the cola market. Suppose that the marginal cost of making cola is $2. Assume also that the demand for cola is given by the following table: Price $8 7 6 5 4 3 2 1 Quantity 5 cans 6 7 8 9 10 11 12 Suppose Coke and Pepsi both supply cola. They form a cartel and agree to cooperate on how much soda to produce. In this cartel case, how many bottles of cola would be sold? Type your answer...arrow_forwardQ16 Suppose we are referring to OPEC, the oil cartel. Which would make it easier to maintain an effective collusive agreement among OPEC members? Multiple Choice the emergence of a number of potential entrant firms a decrease in the elasticity of demand for the OPEC's oil a new method of pricing that makes it more difficult for cartel members to determine the prices at which other cartel members are selling oil an increase in the number of substitutes for the oil produced by the OPEC cartel a pledge of allegiance to the cartelarrow_forward
- 14. Aside from advertising, how can monopolisticallycompetitive firms increase demand for their products? 17. Would you expect the kinked demand curve to bemore extreme (like a right angle) or less extreme (like anormal demand curve) if each firm in the cartel producesa near-identical product like OPEC and petroleum?What if each firm produces a somewhat differentproduct? Explain your reasoning.arrow_forward4. Imagine a market with demand P = 420 – Q in each period. Two firms are thinking about colluding. They each have cost C(Qi) = 60Qi. If they cooperate and behave as a monopoly, then they have a marginal revenue curve, MRm = 420 – 2Q, and a marginal cost curve, MCm = 60. If they are in a cartel, then the firms will split the monopoly production and profits. If they compete, then they face MRi = 420 – 2Qi – Q-I and MCi = 60. a. If the firms stick to their agreement (cooperate), how much per-period profit do they each make? b. If they are not able to maintain their agreement (compete), what is their per-period profit? c. If one firm cheats on their agreement (deviate), how much does each firm make? Be sure to specify both the profit for the cheater and the firm cheated-on. d. Suppose the firms assume that their interaction will last forever (r = 1) and they share the common discount value R. What is the lowest value of R such that both firms are willing to continue with the cartel…arrow_forward1arrow_forward
- 3. Breakdown of a cartel agreement Consider a town in which only two residents, Hubert and Kate, own wells that produce water safe for drinking. Hubert and Kate 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. is Price (Dollars per gallon) 5.40 4.95 4.50 4.05 3.60 3.15 2.70 2.25 1.80 1.35 $ 0.90 0.45 0 Suppose Hubert and Kate form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output gallons. As part of their cartel agreement, Hubert and Kate agree to split production equally. Therefore, Hubert's profit is and Kate's profit is $ Quantity Demanded (Gallons of water) 0 25 50 75 100 125 150 175 200 225 250 275 300 Suppose that Hubert and Kate have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Hubert says to himself, "Kate…arrow_forwardSuppose tuition fees for a university increase from £3,000 to £9,000. Afterthe increase, enrolment drops by 5%. e) Explain why setting up a cartel and maintaining collusion may be difficultin general.f) Explain how a maximum tuition fee of £9000 imposed by the governmentmay facilitate collusion between universities.arrow_forwardHandwritten asap plzzzzzz...solve 20 mins..i"ll give you more votesarrow_forward
- Oaksville has two tennis instructors, Sam and Jack. The figure shows the demand curve and marginal revenue for tennis lesson appointments and the average total cost. Would Sam and Jack have an incentive to break the cartel agreement and lower their price to increase the number of tennis lesson appointments? Explain.arrow_forwardG The formula t xC Where Does X b My Questions X BC Broward C cmillanlearning.com/sac/5078081#/5078081/12/-1 Completed 16 out of 20 Question 13 of 20 > Which of these will contribute to a cartel's stability? O a copyright Obrand differentiation O ease of entry into an industry O having few members with similar goals Rain 五0arrow_forward25: What are the Characteristics of a Oligopoly Market? 26: What are the Characteristics of a Monopoly Market? 27: What are Intellectual Property Rights?arrow_forward
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