) An oil cartel, OPEC, controls much of the supply and prices of oil production in...
) An oil cartel, OPEC, controls much of the supply and
prices of oil production in the
world. Oil is supplied according to the following
equation: P = 3Q (P in dollars, Q in
billions of barrels) and it is demanded according to
the following equation P = 360 –
12Q. Marginal revenue for OPEC follows this equation:
P = 360 – 24Q. Utilize these
mathematical expressions to answer the following
questions.
a. Solve for an efficient market equilibrium and
graphically illustrate this solution.
(3 points)
b. Solve for the actual market outcome given that the
cartel acts as a monopolist and
illustrate this solution graphically. (3
points)
c. What is the deadweight loss associated with this
monopoly setting prices? (3
point)
d. Why does resource substitution occur later under a
monopoly? (3 point)
e. Why might a cartel remain in place in spite of the
fact that welfare is lost?
Homework Answers
Add Answer to:
) An oil cartel, OPEC, controls much of the supply and
prices of oil production in...
4、5and 6 thanks 1. Let the production function beq(: capital, L: labor), the unit prices of...
4、5and 6 thanks
1. Let the production function beq(: capital, L: labor), the unit prices of capital and labor ba both SI 28 (a) Find the cost function. (b) If the firm with this production function is in a competitive market and the market price is $12, how many units of products should the firm produce? -6 2. (a) Let the cost function be C(ą)-F+mq (i) Is there economies of scale? (i) If market price is equal to margiial cost,...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal cost MCQ) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity...
#2 please 2. Show graphically the optimum output level in the short-rum for a monopolistically competitive...
#2 please
2. Show graphically the optimum output level in the short-rum for a monopolistically competitive firm experiencing a. (positive) profit b. Break-even c. Accruing negative profit yet continuing to operate d shut-down 3. Explain why the OPEC cartel fomed by nations supplying majority ofthe oil to the un-satiating Westen world can not seem t putits acttogether to maintainits limited level of output 4. A price-leader produces quantities at prices that the rest of the small otherwise competitive) fims cannot...
2. Suppose a frm, tandard Ol, owns al t h land that can supportoll production, andis thus has a m...
2. Suppose a frm, tandard Ol, owns al t h land that can supportoll production, andis thus has a monopoly in the market for oil. a. Draw the typical diagram for a monopoly market, showing the profit maximizing quantity and price of Standard Oil'soil. Draw the cost curves so that the firm is making positive profits, and show the profit box. Make sure to label all relevant curves. Now draw the monopoly diagram again, but shading in consumer surplus, producer...
Oil prices rose more than 20% this year but there were no sharp spikes and crude...
Oil prices rose more than 20% this year but there were no sharp spikes and crude futures barely sniffed $70 a barrel despite attacks on the world’s biggest oil producer, sanctions that crippled crude exports of two OPEC members and gigantic supply cuts from big oil producing countries. The price gains in crude oil benchmarks were all in the first quarter of 2019, even as the next several months featured supply shocks that in the past would probably have propelled...
Oil prices rose more than 20% this year but there were no sharp spikes and crude...
Oil prices rose more than 20% this year but there were no sharp spikes and crude futures barely sniffed $70 a barrel despite attacks on the world’s biggest oil producer, sanctions that crippled crude exports of two OPEC members and gigantic supply cuts from big oil producing countries. The price gains in crude oil benchmarks were all in the first quarter of 2019, even as the next several months featured supply shocks that in the past would probably have propelled...
1) Supply and demand P = 0.5QS + 30 P = -0.4QD + 120 a) Given...
1) Supply and demand P = 0.5QS + 30 P = -0.4QD + 120 a) Given the above equations, produce a chart illustrating both the supply and demand schedules in increments of 5 ranging from price = 50 to price = 110. b) Solve for the equilibrium price and quantity and show your work. c) Graph the result, labeling the axes, the supply and demand curves, the equilibrium point, and the price and quantity amounts. Use a proper scale. d)...
Economic quizs, please help check my answers. UNIVERSITY JON Question 1 Ia member of a cartel...
Economic quizs, please help check my answers.
UNIVERSITY JON Question 1 Ia member of a cartel is the first to alert authorities to the cartel behavior, which of the following w occur to this member firm? Not yet answered Points out of 1.00 P er question 3 10 11 12 Select one: • A. The firm will not be penalized. B. The firm's most senior managers will face jail time. 5 16 17 18 C. The firm will face significant...
Question 2 (15 points) Continuing your analysis of the competitive US manufacturing industry from Question 1,...
Question 2 (15 points) Continuing your analysis of the competitive US manufacturing industry from Question 1, with demand of Q = 200-P and supply of Q. = P-20, suppose a technological innovation causes the supply curve to shift down by $20 for every given quantity Q. • Depict the original supply, the new supply, and the original demand curves on the usual P, Q diagram. Label all intercepts. Clearly indicate and label the new market equilibrium. 2/8/2 compass 20 Mlinois.edu/bbcswebdavipid-4037356-dt-con020%20ECON528%20M6...
Please explain in details with step-by-step solution, Thank you very much b) Evren wants to go...
Please explain in details with step-by-step solution, Thank you
very much
b) Evren wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K-1, r-500). He must pay unionized donut bakers a monthly salary of $400 each. He projects his monthly production function to be Q 5KL, where Q is tons of donuts. i) With the current level of...
4、5and 6 thanks
1. Let the production function beq(: capital, L: labor), the unit prices of capital and labor ba both SI 28 (a) Find the cost function. (b) If the firm with this production function is in a competitive market and the market price is $12, how many units of products should the firm produce? -6 2. (a) Let the cost function be C(ą)-F+mq (i) Is there economies of scale? (i) If market price is equal to margiial cost,...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal cost MCQ) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity...
#2 please
2. Show graphically the optimum output level in the short-rum for a monopolistically competitive firm experiencing a. (positive) profit b. Break-even c. Accruing negative profit yet continuing to operate d shut-down 3. Explain why the OPEC cartel fomed by nations supplying majority ofthe oil to the un-satiating Westen world can not seem t putits acttogether to maintainits limited level of output 4. A price-leader produces quantities at prices that the rest of the small otherwise competitive) fims cannot...
2. Suppose a frm, tandard Ol, owns al t h land that can supportoll production, andis thus has a monopoly in the market for oil. a. Draw the typical diagram for a monopoly market, showing the profit maximizing quantity and price of Standard Oil'soil. Draw the cost curves so that the firm is making positive profits, and show the profit box. Make sure to label all relevant curves. Now draw the monopoly diagram again, but shading in consumer surplus, producer...
Economic quizs, please help check my answers.
UNIVERSITY JON Question 1 Ia member of a cartel is the first to alert authorities to the cartel behavior, which of the following w occur to this member firm? Not yet answered Points out of 1.00 P er question 3 10 11 12 Select one: • A. The firm will not be penalized. B. The firm's most senior managers will face jail time. 5 16 17 18 C. The firm will face significant...
Question 2 (15 points) Continuing your analysis of the competitive US manufacturing industry from Question 1, with demand of Q = 200-P and supply of Q. = P-20, suppose a technological innovation causes the supply curve to shift down by $20 for every given quantity Q. • Depict the original supply, the new supply, and the original demand curves on the usual P, Q diagram. Label all intercepts. Clearly indicate and label the new market equilibrium. 2/8/2 compass 20 Mlinois.edu/bbcswebdavipid-4037356-dt-con020%20ECON528%20M6...
Please explain in details with step-by-step solution, Thank you
very much
b) Evren wants to go into the donut business. For $500 per month he can rent a bakery complete with all the equipment he needs to make a dozen different kinds of donuts (K-1, r-500). He must pay unionized donut bakers a monthly salary of $400 each. He projects his monthly production function to be Q 5KL, where Q is tons of donuts. i) With the current level of...
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