Reference: Ref 15-3 (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. Suppose that the three countries have a cartel agreement where they attempt to mimic monopoly behavior. If each country has the incentive to cheat, and does cheat, what will the final market outcome be?
A) The market quantity will be 1,600 and the market price will be 40.
B) The market quantity will be 1,200 and the market price will be 60.
C) The market quantity will be 1,400 and the market price will be 50.
D) The market quantity will be 1,800 and the market price will be 30.

Question

Reference: Ref 15-3 (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. Suppose that the three countries have a cartel agreement where they attempt to mimic monopoly behavior. If each country has the incentive to cheat, and does cheat, what will the final market outcome be?
A) The market quantity will be 1,600 and the market price will be 40. 
B) The market quantity will be 1,200 and the market price will be 60. 
C) The market quantity will be 1,400 and the market price will be 50. 
D) The market quantity will be 1,800 and the market price will be 30.

Quizplus · Accepted Answer

The Answer of  Reference: Ref 15-3 (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. Suppose that the three countries have a cartel agreement where they attempt to mimic monopoly behavior. If each country has the incentive to cheat, and does cheat, what will the final market outcome be?
A) The market quantity will be 1,600 and the market price will be 40. 
B) The market quantity will be 1,200 and the market price will be 60. 
C) The market quantity will be 1,400 and the market price will be 50. 
D) The market quantity will be 1,800 and the market price will be 30.

Reference: Ref 15-3 (Table: Three-Country Oil Production) Refer to the Table