(Table: Oil Production and Demand) Use Table: Oil Production and Demand. Assume that the oil industry is a duopoly and that the marginal cost and fixed cost of producing oil are both zero. Suppose that the two firms are maximizing industry profit and splitting the profit evenly. If both firms engage in noncooperative behaviour, the industry output will be _____ barrels, and the price of oil will be _____. Quantity Price (per barrel) Total revenue 0 $160 $0 10 150 1,500 20 140 2,800 40 130 3,900 50 120 4,800 60 110 5,500 70 100 6,000 80 90 6,300 90 80 6,400 100 70 6,300 110 60 5,500 120 50 4,800 130 40 3,900 140 30 2,800 150 20 1,500 160 10 0
(Table: Oil Production and Demand) Use Table: Oil Production and Demand. Assume that the oil industry is a duopoly and that the marginal cost and fixed cost of producing oil are both zero. Suppose that the two firms are maximizing industry profit and splitting the profit evenly. If both firms engage in noncooperative behaviour, the industry output will be _____ barrels, and the price of oil will be _____. Quantity Price (per barrel) Total revenue 0 $160 $0 10 150 1,500 20 140 2,800 40 130 3,900 50 120 4,800 60 110 5,500 70 100 6,000 80 90 6,300 90 80 6,400 100 70 6,300 110 60 5,500 120 50 4,800 130 40 3,900 140 30 2,800 150 20 1,500 160 10 0
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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(Table: Oil Production and Demand) Use Table: Oil Production and Demand. Assume that the oil industry is a duopoly and that the marginal cost and fixed cost of producing oil are both zero. Suppose that the two firms are maximizing industry profit and splitting the profit evenly. If both firms engage in noncooperative behaviour, the industry output will be _____ barrels, and the
|
Quantity |
Price (per barrel) |
Total revenue |
|
0 |
$160 |
$0 |
|
10 |
150 |
1,500 |
|
20 |
140 |
2,800 |
|
40 |
130 |
3,900 |
|
50 |
120 |
4,800 |
|
60 |
110 |
5,500 |
|
70 |
100 |
6,000 |
|
80 |
90 |
6,300 |
|
90 |
80 |
6,400 |
|
100 |
70 |
6,300 |
|
110 |
60 |
5,500 |
|
120 |
50 |
4,800 |
|
130 |
40 |
3,900 |
|
140 |
30 |
2,800 |
|
150 |
20 |
1,500 |
|
160 |
10 |
0 |
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