Use the following to answer questions: Table: Three-Country Oil Production $$\begin{array} { | c | c | }
\hline \text { Total Market Output } & \text { Market Price } \
\hline 600 & 90 \
\hline 800 & 80 \
\hline 1,000 & 70 \
\hline 1,200 & 60 \
\hline 1,400 & 50 \
\hline 1,600 & 40 \
\hline 1,800 & 30 \
\hline
\end{array}$$
-(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 by producing 200 more barrels than the other two countries. What is the new market price when Country A cheats on the agreement?
A) 60
B) 50
C) 20
D) 40

Question

Use the following to answer questions: Table: Three-Country Oil Production $$\begin{array} { | c | c | } 
\hline \text { Total Market Output } & \text { Market Price } \
\hline 600 & 90 \
\hline 800 & 80 \
\hline 1,000 & 70 \
\hline 1,200 & 60 \
\hline 1,400 & 50 \
\hline 1,600 & 40 \
\hline 1,800 & 30 \
\hline
\end{array}$$
-(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 by producing 200 more barrels than the other two countries. What is the new market price when Country A cheats on the agreement?
A) 60
B) 50
C) 20
D) 40

Quizplus · Accepted Answer

If Country A produces 200 more barrels, the total market output increases by 200. Assuming the other two countries produce 400 each, the new total is 1,400 barrels, corresponding to a market price of 50.

Use the Following to Answer Questions: Table: Three-Country Oil Production