Table: Market for Oil World Price (per barrel) World Quantity (MBD) $36.00 100 37.50 98 47.50 82 50.00 80 Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total of 100 MBD. The world price of oil at this quantity is $36 per barrel, so each country earns $360 million a day. Suppose that these countries form a cartel and each country produces 8 MBD. If nine of the cartel members cheat and produce 10 MBD while one country keeps its promise and maintains production at 8 MBD, each cheater will earn revenue of: $375 million a day, while the noncheating country will earn $360 million a day. $400 million a day, while the noncheating country will earn $360 million a day. $400 million a day, while the noncheating country will earn $300 million a day. $375 million a day, while the noncheating country will earn $300 million a day.
Table: Market for Oil World Price (per barrel) World Quantity (MBD) $36.00 100 37.50 98 47.50 82 50.00 80 Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total of 100 MBD. The world price of oil at this quantity is $36 per barrel, so each country earns $360 million a day. Suppose that these countries form a cartel and each country produces 8 MBD. If nine of the cartel members cheat and produce 10 MBD while one country keeps its promise and maintains production at 8 MBD, each cheater will earn revenue of: $375 million a day, while the noncheating country will earn $360 million a day. $400 million a day, while the noncheating country will earn $360 million a day. $400 million a day, while the noncheating country will earn $300 million a day. $375 million a day, while the noncheating country will earn $300 million a day.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![Table: Market for Oil
World Price (per barrel) World Quantity (MBD)
$36.00
100
37.50
98
47.50
82
50.00
80
Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total of
100 MBD. The world price of oil at this quantity is $36 per barrel, so each country earns $360 million a day. Suppose that
these countries form a cartel and each country produces 8 MBD. If nine of the cartel members cheat and produce 10 MBD
while one country keeps its promise and maintains production at 8 MBD, each cheater will earn revenue of:
$375 million a day, while the noncheating country will earn $360 million a day.
$400 million a day, while the noncheating country will earn $360 million a day.
$400 million a day, while the noncheating country will earn $300 million a day.
$375 million a day, while the noncheating country will earn $300 million a day.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fad61fb23-6772-4c68-a944-71325d2213c5%2F9bd037aa-572e-43ad-b7e3-1aec5b3f265b%2Fj1zrlwk_processed.png&w=3840&q=75)
Transcribed Image Text:Table: Market for Oil
World Price (per barrel) World Quantity (MBD)
$36.00
100
37.50
98
47.50
82
50.00
80
Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total of
100 MBD. The world price of oil at this quantity is $36 per barrel, so each country earns $360 million a day. Suppose that
these countries form a cartel and each country produces 8 MBD. If nine of the cartel members cheat and produce 10 MBD
while one country keeps its promise and maintains production at 8 MBD, each cheater will earn revenue of:
$375 million a day, while the noncheating country will earn $360 million a day.
$400 million a day, while the noncheating country will earn $360 million a day.
$400 million a day, while the noncheating country will earn $300 million a day.
$375 million a day, while the noncheating country will earn $300 million a day.
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