1. A large share of the world supply of diamonds comesfrom Russia and South Africa. Suppose that the mar-ginal cost of mining diamonds is constant at $1,000 perdiamond and the demand for diamonds is describedby the following schedule:Price$8,0007,0006,0005,0004,0003,0002,0001,000Quantity5,000 diamonds6,0007,0008,0009,00010,00011,00012,000a. If there were many suppliers of diamonds, whatwould be the price and quantity?b. If there were only one supplier of diamonds, whatwould be the price and quantity?c. If Russia and South Africa formed a cartel, whatwould be the price and quantity? If the countriessplit the market evenly, what would be SouthAfrica's production and profit? What would hap-pen to South Africa's profit if it increased its pro-duction by 1,000 while Russia stuck to the cartelagreement?d. Use your answers to part (c) to explain why cartelagreements are often not successful.

The objective of this question is to understand the impact of market structure on the price and…

Answered: 1. A large share of the world supply of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Price and cost (dollars per unit) 50.00 40.00 S=MC 30.00 20.00- 10.00. MR D. 100 200 300 400 500 Quantity (units per hour) In the above figure, a monopoly should charge $ for its output when maximizing profit. O $10 $20 $30 $40 O $50
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5. Suppose a company has a monopoly on a game called Monopoly and faces a demand curve given by QT = 100-P and a marginal revenue function given by MR = 100 - 2QT where QT equals the combined total number of games produced per hour in the company's two factories (QT = 91 + 92). If factory 1 has a marginal cost function given by MC₁ = q1-5 and factory 2 has a marginal cost function given by MC2 = 0.5q25, how much total output will the company choose to produce and how will it distribute this production between its two factories in order to maximize profits?
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1. Problems and Applications Q1 A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $2,000 per diamond, and the demand for diamonds is described by the following schedule: Price Quantity (Dollars) (Diamonds) 8,000 2,000 7,000 3,000 6,000 4,000 5,000 5,000 4,000 6,000 3,000 7,000 2,000 8,000 1,000 9,000 If there were many suppliers of diamonds, the price would be S per diamond and the quantity sold would be diamonds. diamonds. If there were only one supplier of diamonds, the price would be per diamond and the quantity sold would be Suppose Russia and South Africa form a cartel. diamonds. If the countries split the market In this case, the price would be S evenly, South Africa would produce per diamond and the total quantity sold would be diamonds and earn a profit of $ If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit…

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