(Table: Market for Oil) Refer to the table. Suppose that thesecountries form a cartel and each country produces 8 MBD. Ifone of the cartel members cheats by secretly pushing itsproduction back to 10 MBD rather than 8, total revenue forthe non-cheating countries would:

Question

Quizplus · Accepted Answer

If one cartel member cheats and increases their production to 10 MBD, the total supply of oil in the market increases to 26 MBD. This leads to a decrease in price from $40 per barrel to $35 per barrel. The non-cheating countries' total revenue would decrease from $400 million to $380 million a day since they would still be producing 24 MBD but receiving a lower price per barrel. Therefore, choice A is the correct answer.

(Table: Market for Oil) Refer to the Table