(Table: Three-Country Oil Production) Refer to the table.Suppose that three countries are engaged in oil production.For simplicity, assume zero costs so that revenue equals profit.Assume that Country A cheats on the cartel agreement byproducing 200 more barrels than the other two countries.What is the new quantity sold by Country A?

Question

Quizplus · Accepted Answer

If Country A produces 200 more barrels than the other two countries, then its new production would be 800 + 200 = 1000 barrels.
However, since the three countries are in a cartel, they all agree to limit their production to a combined total of 2400 barrels.
If Country A produces 1000 barrels, then the other two countries can only produce a combined total of 1400 barrels (2400 - 1000).
Therefore, the new quantity sold by Country A would be 1000 - 600 (its original production) = 400 barrels.

(Table: Three-Country Oil Production) Refer to the Table