Market Price($) 400 Last Row was put there on accident. a. If the four countries
ID: 2495638 • Letter: M
Question
Market Price($)
400
Last Row was put there on accident.
a. If the four countries create a cartel and agree to mimic monopoly-like
behavior, what level of output would each individual firm produce? What is
each firm’s profit? (2 pts.)
b. Assume that Country A cheats on the cartel agreement by producing 200
more barrels than the other three countries.
i. What is the new market price when Country A cheats? (1 pt.)
ii. What is the new profit earned by Country A? What profit does each
of the other three countries make? (2 pts.)
Market Price($)
Profit ($)400
80 600 70 800 60 1000 50 1200 40 1400 30 1600 20Explanation / Answer
a. each firm will produce at level of 1000 and each firms profit will be $2000
b. i. the price will be $40