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tudy Tools s ss Tips « s Tips CENGAGE MINDTAP Homework (Ch 07) PRICE (Dollars) 100 90 80 70 60 40 30 20 10 0 0 MR MC Demand 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 OIL (Barrels per day) + Free Market Cartel ? Q Search this course X

tudy Tools s ss Tips « s Tips CENGAGE MINDTAP Homework (Ch 07) PRICE (Dollars) 100 90 80 70 60 40 30 20 10 0 0 MR MC Demand 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 OIL (Barrels per day) + Free Market Cartel ? Q Search this course X

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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All Shows | PBS L Katey ✓ My Home Courses Help Catalog and Study Tools Rental Options College Success Tips Career Success Tips @ Give Feedback X 77°F Sunny Eastern New Mexico UrX « CENGAGE MINDTAP Homework (Ch 07) PRICE (Dollars) https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=5894682496242974058071538219&elSBN=9781337 100 90 80 70 60 50 5 40 30 20 10 o Students - MyENMU X 0 0 MR International EconomicX MC Demand 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 OIL (Barrels per day) 19 MindTap - Cengage Le X H + Free Market Cartel a MindTap - Cengage Le X O + I Search this course X 4:39 PM 10/8/2022 X ||| = A-Z 22
Transcribed Image Text:All Shows | PBS L Katey ✓ My Home Courses Help Catalog and Study Tools Rental Options College Success Tips Career Success Tips @ Give Feedback X 77°F Sunny Eastern New Mexico UrX « CENGAGE MINDTAP Homework (Ch 07) PRICE (Dollars) https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=5894682496242974058071538219&elSBN=9781337 100 90 80 70 60 50 5 40 30 20 10 o Students - MyENMU X 0 0 MR International EconomicX MC Demand 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 OIL (Barrels per day) 19 MindTap - Cengage Le X H + Free Market Cartel a MindTap - Cengage Le X O + I Search this course X 4:39 PM 10/8/2022 X ||| = A-Z 22
All Shows | PBS L Katey ✓ My Home Courses Help Catalog and Study Tools Rental Options College Success Tips Career Success Tips @ Give Feedback X 77°F Sunny Eastern New Mexico UrX « CENGAGE MINDTAP Homework (Ch 07) 4. The oil cartel https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=5894682496242974058071538219&elSBN=9781337 Students - MyENMU X 100 Suppose that OPEC does not exist and that the 12 oil-producing nations compete in the world market, which is perfectly competitive. Note: Dashed drop lines will automatically extend to both axes. 90 The Organization of Petroleum Exporting Countries (OPEC) is a group of 12 member countries that formed a cartel to sell petroleum on the world market. They support prices higher than would exist under more competitive conditions to maximize member-nation profits and restrict competition among themselves via production quotas. On the following graph, use the black point (plus symbol) to indicate the industry's free market profit-maximizing output. 80 70 60 International EconomicX H O MC MindTap - Cengage Le X ə 19 H + Free Market MindTap - Cengage Le X + Cartel a (?) O I Search this course X 4:39 PM 10/8/2022 X ||| = A-Z 21
Transcribed Image Text:All Shows | PBS L Katey ✓ My Home Courses Help Catalog and Study Tools Rental Options College Success Tips Career Success Tips @ Give Feedback X 77°F Sunny Eastern New Mexico UrX « CENGAGE MINDTAP Homework (Ch 07) 4. The oil cartel https://ng.cengage.com/static/nb/ui/evo/index.html?deploymentId=5894682496242974058071538219&elSBN=9781337 Students - MyENMU X 100 Suppose that OPEC does not exist and that the 12 oil-producing nations compete in the world market, which is perfectly competitive. Note: Dashed drop lines will automatically extend to both axes. 90 The Organization of Petroleum Exporting Countries (OPEC) is a group of 12 member countries that formed a cartel to sell petroleum on the world market. They support prices higher than would exist under more competitive conditions to maximize member-nation profits and restrict competition among themselves via production quotas. On the following graph, use the black point (plus symbol) to indicate the industry's free market profit-maximizing output. 80 70 60 International EconomicX H O MC MindTap - Cengage Le X ə 19 H + Free Market MindTap - Cengage Le X + Cartel a (?) O I Search this course X 4:39 PM 10/8/2022 X ||| = A-Z 21
Expert Solution
Step 1

In free market (perfectly competitive) equilibrium, the price equivalent to MC & equilibrium is at the cross-section of the Demand and MC curves.

The equilibrium quantity for a cartel is computed at the point of a cross-section of MR and MC. The point where the equilibrium quantity intersects the demand curve computes the price level.

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