Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 15, Problem 12APA
(a)
To determine
Identify the influence of the colluding oligopoly on price and quantity.
(b)
To determine
Construct a graph to show the influence of the colluding oligopoly on price and quantity.
(c)
To determine
Identify the difficulties faced by the Quebec cartel to act as a monopoly.
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The cartel of copper exporting countries is called COPEC. As part of an international trade agreement, the United States has agreed to buy all the copper that COPEC wants to sell to the United States at a constant price of $100 per tonne. COPEC also sells copper in Europe at a price of $150 per tonne. COPEC acts just like a monopolist; if it finds it is profit maximising to sell in the United States at $100 per tonne and simultaneously to sell in Europe for $150 a tonne, what is the price elasticity of demand of COPEC’s copper in the European market?
Table: Market for Oil
World Price (per barrel) World Quantity (MBD)
$36.00
100
37.50
98
47.50
82
50.00
80
Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total of
100 MBD. The world price of oil at this quantity is $36 per barrel, so each country earns $360 million a day. Suppose that
these countries form a cartel and each country produces 8 MBD. If nine of the cartel members cheat and produce 10 MBD
while one country keeps its promise and maintains production at 8 MBD, each cheater will earn revenue of:
$375 million a day, while the noncheating country will earn $360 million a day.
$400 million a day, while the noncheating country will earn $360 million a day.
$400 million a day, while the noncheating country will earn $300 million a day.
$375 million a day, while the noncheating country will earn $300 million a day.
The figure below illustrates the market for steel. If the steel market is competitive, firms can produce steel at a constant marginal cost of $100 per ton. Therefore, the price of steel is $100 per ton, and 100 tons are produced. Assume that if all the steel companies consolidate into a monopoly, the monopoly marginal cost will fall to $70 per ton. Use the straight line tool to draw the monopoly marginal revenue and marginal cost lines (extend the marginal cost line to 300 tons). Then use the plot point tool to plot the monopoly profit maximizing price and output on the demand curve.
Part 2.
If the market is competitive, total surplus is $ _________
Part 3.
If the market is controlled by a monopoly, total surplus is $________
Chapter 15 Solutions
Macroeconomics
Ch. 15.1 - Prob. 1RQCh. 15.1 - Prob. 2RQCh. 15.1 - Prob. 3RQCh. 15.1 - Prob. 4RQCh. 15.2 - Prob. 1RQCh. 15.2 - Prob. 2RQCh. 15.2 - Prob. 3RQCh. 15.2 - Prob. 4RQCh. 15.2 - Prob. 5RQCh. 15.2 - Prob. 6RQ
Ch. 15.3 - Prob. 1RQCh. 15.3 - Prob. 2RQCh. 15.4 - Prob. 1RQCh. 15.4 - Prob. 2RQCh. 15.4 - Prob. 3RQCh. 15.4 - Prob. 4RQCh. 15.4 - Prob. 5RQCh. 15 - Prob. 1SPACh. 15 - Prob. 2SPACh. 15 - Prob. 3SPACh. 15 - Prob. 4SPACh. 15 - Prob. 5SPACh. 15 - Prob. 6SPACh. 15 - Prob. 7SPACh. 15 - Prob. 8SPACh. 15 - Prob. 9APACh. 15 - Prob. 10APACh. 15 - Prob. 11APACh. 15 - Prob. 12APACh. 15 - Prob. 13APACh. 15 - Prob. 14APACh. 15 - Prob. 15APACh. 15 - Prob. 16APACh. 15 - Prob. 17APACh. 15 - Prob. 18APACh. 15 - Prob. 19APACh. 15 - Prob. 20APACh. 15 - Prob. 21APACh. 15 - Prob. 22APACh. 15 - Prob. 23APA
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