Table: Market for Oil Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total 100 MBD. The world price of oil at this quantity is $36 per barrel so each country earns $360 million a day. Reference: Ref 15-2 (Table: Market for Oil) Refer to the table. Suppose that these countries form a cartel and each country produces 8 MBD. If one of the cartel members cheats by secretly pushing its production back to 10 MBD rather than 8, total revenue for the non-cheating countries would:
A) decrease from $400 million to $380 million a day.
B) decrease from $360 million to $288 million a day.
C) increase from $400 million to $500 million a day.
D) remain unchanged at $380 million a day.

Question

Table: Market for Oil Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total 100 MBD. The world price of oil at this quantity is $36 per barrel so each country earns $360 million a day.  Reference: Ref 15-2 (Table: Market for Oil) Refer to the table. Suppose that these countries form a cartel and each country produces 8 MBD. If one of the cartel members cheats by secretly pushing its production back to 10 MBD rather than 8, total revenue for the non-cheating countries would:
A) decrease from $400 million to $380 million a day. 
B) decrease from $360 million to $288 million a day. 
C) increase from $400 million to $500 million a day. 
D) remain unchanged at $380 million a day.

Quizplus · Accepted Answer

The Answer of Table: Market for Oil Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total 100 MBD. The world price of oil at this quantity is $36 per barrel so each country earns $360 million a day.  Reference: Ref 15-2 (Table: Market for Oil) Refer to the table. Suppose that these countries form a cartel and each country produces 8 MBD. If one of the cartel members cheats by secretly pushing its production back to 10 MBD rather than 8, total revenue for the non-cheating countries would:
A) decrease from $400 million to $380 million a day. 
B) decrease from $360 million to $288 million a day. 
C) increase from $400 million to $500 million a day. 
D) remain unchanged at $380 million a day.

Table: Market for Oil Suppose That Oil Is Produced by 10