Answered: Explain the difference between a cartel…

Business

Economics

Explain the difference between a cartel and tacit collusion. Is tacit collusion illegal in the United States? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: . for two firms that share a market if demand p=300-q where q is the total quantity sold and fixed…

A: Given Demand- p= 300-q Fixed Cost= 300 Marginal Cost= 20

Q: a. What will happen to the equilibrium of the two company if they were to form a cartel and…

A: Below is the two nash equilibrium: First equilibrium, (60, 60)Second equilibrium, (30, 30)

Q: Suppose that Bob and Cho have been successfully operating as a cartel. They each charge the monopoly…

A: Disclaimer: Since it is a multipart question, I am providing you with the answer to the first three…

Q: Suppose two companies, Apples and Dell, are a competing duopoly. If both companies charge the high…

A: The phrase "Nash equilibrium" in game theory refers to a situation where the best outcome is reached…

Q: constant and equals $0.60 per can. Also, assume that neither firm had any startup costs. That is,…

A: The profit maximising quantity and price occurs when the marginal revenue curve is equal to marginal…

Q: 3. Breakdown of a cartel agreement Consider a town in which only two residents, Gregor and Haidy,…

A: DISCLAIMER “Since you have asked multiple questions, we will solve the first three questions for…

Q: ter Amy increases her production, Van's profit becomes S e profits of Van and Amy) is now s Amy's…

A: 1 Blank - 3.00 2 Blank - 270 3 Blank - 405 (810/2) 4 Blank - 405 (810/2) 5 Blank - decreases 6 Blank…

Q: PRICE (Dollars per can) 2.00 1.80 1.60 Demand 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0 0 MC = ATC MR 90…

A: Step 1:When acting as a profit-maximizing cartel, each company will produce 180 cans and charge…

Q: Consider a town in which only two residents, Clancy and Eileen, own wells that produce water safe…

A: A monopoly is a market condition in which there will be only a single seller present. The only…

Q: Imperfect Cartel vs Perfect Cartel What is the difference between these two and how do they…

A: Cartel is the form a collection of independent businesses that have agreed to increase profits by…

Q: Cartels usually breakdown because of what? Cartels can only be effectively run if they use Game…

A: A cartel is a gathering of free market members who connive with one another to work on their…

Q: You are the manager of Billy's Burritos, one of only two suppliers of tasty fish tacos in town.…

A: In Cournot duopoly, two firms compete in quantity and maximise profit by producing at MR=MC

Q: QUESTION 3 Suppose the demand for oil is P-125Q-0.20. There are two oil producers who do not…

A: Production costs allude to each of the immediate and backhanded costs organizations face from…

Q: A 5-member commodity cartel faces the demand curve: P = 60 - 0.4Q. Each member can produce output at…

A: Whenever a cartel is formed the industry acts like a monopolist and divides the quantity and profits…

Q: Solve the attachment.

A: Oligopoly is a market structure with a limited number of firms, none of which could keep others from…

Q: Policing members' output restrictions and preventing new entrants. b. Agreeing on the price to be…

A: * ANSWER :- * (2) * The OPTION A (Policing members' output restrictions and preventing new…

Q: Which of the following is NOT an example of a government-supported cartel? milk cartel in the United…

A: A government-supported cartel is an agreement between businesses to reduce competition and raise…

Q: 18. When OPEC raised the price of oil dramatically in the mid-1970s, experts said it was unlikely…

A: OPEC which stands for Organization of the Petroleum Exporting Countries is a cluster of…

Q: Each member of a cartel a. faces a temptation to cheat on the agreement because lowering its…

A: Cartel is an agreement made by a group of producers to sell goods at a particular price. Cartel…

Q: The optimal output and price for the cartel shown in the accompanying diagram is: Price (dollars)…

A: Cartel occurs when two or more firms formally decide to regulate the market in order to control the…

Q: Explain the problem of forming and maintaining the cartel, show graphical analysis

A: The objective of this question is to understand the challenges associated with forming and…

Q: 3. Breakdown of a cartel agreement Consider a town in which only two residents, Sean and Yvette, own…

A: In economics, profit maximization is the short run or long run process by which a company might…

Q: 3. The cartel of copper exporting countries is called COPEC. As part of an international trade…

A: Price elasticity of demand for a commodity is defined as the proportional change in the quantity…

Q: Q1 a) Briefly explain why the discount factor could credibly be interpreted as the probability of…

A: As there are multiple question, the first question would be answered, to get answers to the rest of…

Q: A car manufacturer Volvo is interested in signing new deals with car dealers across Sweden to sell…

A: A market is where purchasers and dealers can meet to work with the trade or exchange of labor and…

Q: Suppose that James and Amber have been successfully operating as a cartel. They each charge the…

A: Monopoly refers to the form of market in which there is one single seller, and they sell the unique…

Q: Which of the following is likely to hurt the success of a cartel? - the market demand faced by the…

A: In an oligopoly, a cartel refers to a group of firms that comes together and forms a group rather…

Q: An industry consists of two identical firms with total costs of TC=5q+0.5q^2. Market demand is given…

A: Given, the demand curve is P = 125 - Q and the marginal revenue curve is MR = 125 - 2Q. Profit…

Q: 4. Imagine a market with demand P = 420 – Q in each period. Two firms are thinking about colluding.…

A: The marginal revenue curve shows the change in total revenue resulting from selling one extra unit…

Q: 6. Deviating from the collusive outcome Mays and McCovey are beer-brewing companies that operate in…

A: Collusion in oligopoly refers to an agreement or understanding between firms in an oligopolistic…

Q: An economy has two producers for a good that has the demand Q = 30 – P. The firms may operate under…

A: Cartel is an agreement among firms producing similar products to cooperate and act as a monopolist.…

Q: Suppose the demand for oil is P-123Q-0.20 There are two oil producers who do not cooperate,…

A: The word "profit" is often used to refer to the monetary benefit that is realized by a company as a…

Q: Exercise Two firms compete for market shares producing similar goods under imperfect competition.…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: The market for management consulting services is a Stackelberg duopoly. Alvarez Inc. acts as the…

A: We have two firms with equal marginal and average costs

Q: Quantity Price $16 $14 1 $12 $10 3 $8 $6 4 5 $4 $2 $0 7 8

A: Answer: Given that: A cartel when colludes,produces at the point MR=MC in order to maximize…

Q: firm A increases

Q: onsider the market for oil. Suppose for simplicity that there are only two oil roducing…

A: A cooperative game (or coalitional game) is a game in which groups of players ("coalitions") compete…

Q: Isolated Island has two wind turbines producing electricity, one owned by Dick and the other owned…

A: P($) Qd TR=P*Q MR=∆TR/∆Q 12 0 0 11 1 11 11 10 2 20 9 9 3 27 7 8 4 32 5 7 5 35 3 6 6…

Q: Suppose Firm A and B have formed a cartel. MCA = 16+4QA and MCB = 6 +4QB. The market demand is Q =…

A: Cartel firms act like monopoly and these firms distribute output in such way that marginal cost of…

Q: In Cerro Acuchimay, two stalls sell chicha de jora that have identical costs c; = 10y₁ + 20. mmm…

A: Pareto efficient points refer to those steady states deviating from which no one can be made better…

Q: “Firms have an incentive to form a cartel,but once it is formed,they have an incentive to…

A: Cartels are formed when two firms decide to collude among themselves. They are part of duopoly…

Q: Suppose Firm A and B have formed a cartel. and . The market demand is MCA 10+ QA = MCB = 4 +QB Qd =…

A: Marginal Cost of Firm A and Firm B: MCA=10+QA MCB=4+QB Market Demand: Q=36-P [Q=QA+QB] Inverse…

Q: Explain why OPEC has been one of the most successful cartels in recent decades. What factors have…

A: OPEC stands for organization of the petroleum exporting counties. It is a group of 13 country and…

Q: 1. Suppose we live in a world where the widgets market is a monopolistically competitive market with…

A: In monopolistic market scenario firm optimize their output at the level where marginal revenue…

Q: Consider a town in which only two residents, Jacques and Kyoko, own wells that produce water safe…

Question

9) Explain the difference between a cartel and tacit collusion. Is tacit collusion illegal in the United States? Explain.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Describe the difference between tacit collusion and cartel

VIEW

Step 2: Determine whether tacit collusion is illegal in the USA

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

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?
P1
2
Coke 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...
Q16 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 cartel
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.
4. 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…
1
Explains it correctly.solve onlywhen know correct solve
1
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…
Suppose 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.