Figure 7.3.World Oil Market

-Consider Figure 7.3.Under a profit-maximizing cartel,producers realize:

Question

Figure 7.3.World Oil Market
 
-Consider Figure 7.3.Under a profit-maximizing cartel,producers realize:

Quizplus · Accepted Answer

Under a profit-maximizing cartel, producers will restrict output to the point where marginal cost equals marginal revenue. This will result in a higher price and lower output than under perfect competition, and producers will earn higher profits. In Figure 7.3, the profit-maximizing output is Qm, and the price is Pm. The total profit is the area of the rectangle PABC, which is $360.