Principles Of Economics 2e
2nd Edition
ISBN: 9781680920864
Author: Timothy Taylor, Steven A. Greenlaw, David Shapiro
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 10, Problem 17CTQ
Would you expect the kinked
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Why has the OPEC oil cartel succeeded in raising prices substantially while the CIPEC copper cartel has not? What conditions are necessary for successful cartelization?
assuming that you own one of three gas stations in a little town and you and the other gas station owners decide you want to "help each other out" so everyone can make more money."
What arrangements could you make so that all three owners make more money?
Would these arrangements make the three gas stations a cartel?
Is it possible that the violent members of the drug cartels can behave like cartels in legitimate markets?
Chapter 10 Solutions
Principles Of Economics 2e
Ch. 10 - Suppose that, due to a successful advertising...Ch. 10 - Continuing with the scenario in question 1, in the...Ch. 10 - Consider the curve in the figure below, which...Ch. 10 - Sometimes oligopolies in the same industry are...Ch. 10 - What is the relationship between product...Ch. 10 - How is the perceived demand curve for a...Ch. 10 - How does a monopolistic competitor choose its...Ch. 10 - How can a monopolistic competitor tell whether the...Ch. 10 - If the firms in a monopolistically competitive...Ch. 10 - Is a monopolistically competitive firm...
Ch. 10 - Will the firms in an oligopoly act more like a...Ch. 10 - Does each individual in a prisoners dilemma...Ch. 10 - What stops oligopolists from acting together as a...Ch. 10 - Aside from advertising, how can monopolistically...Ch. 10 - Make a case for why monopolistically competitive...Ch. 10 - Would you rather have efficiency or variety? That...Ch. 10 - Would you expect the kinked demand curve to be...Ch. 10 - When OPEC raised the price of oil dramatically in...Ch. 10 - Andreas Day Spa began to offer a relaxing...Ch. 10 - May and Raj me the only two growers who provide...Ch. 10 - Jane and Bill are apprehended for a bank robbery....
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Similar questions
- The diagram below illustrates the change in market equilibrium in the global oil market due to a demand shock, with the demand curve shifting from Demand to Demand'. Supply of oil is provided by OPEC countries, as part of a cartel agreement, and other countries outside the cartel, P. P. Demand Demand Quantity, Q Q Q. Which of the following statements is/are correct? global a) If more countries joined OPEC, and reduced the quantity of oil that they produced as a cartel, it is possible that market oil price could stay the same depending on other market dynamics. b) The price of oil in the global market is fixed by the members of the OPEC cartel. c) If there is increased production of oil in a non-OPEC country when demand is at Demand' there would be a reduction in price from P1, ceteris paribus.arrow_forwardDescribe how drug cartels are able to recruit new members when their members are murdered.arrow_forwardA film called The 33 tells the story of 33 coal miners in Chile who were trapped inside a collapsed coal mine for more than two months. While trapped inside the mine, the miners agreed that if they ever got out alive, they would sell their story as a group, and that none of them would tell their stories individually. In essence, they formed a cartel, agreeing to sell just one big story for a lot of money rather than each miner selling his own individual story. As it turned out, they did get out alive and they did stick to their agreement. None of the miners sold his story individually. That is, the “cartel” formed by these trapped coal miners worked; nobody cheated. Explain why this cartel, unlike almost all others, was successful. This is not a research question; you don’t have to have the factually correct answer to earn full credit on this question. Rather, a full-credit answer will explain the conditions under which a cartel will be successful and then indicate the specifics of…arrow_forward
- What problems usually make cartels collapse? How was OPEC able to avoid this fate, at least through the mid-1980s?arrow_forwardWhat is a cartel? Explain the coordination problem it faces.arrow_forwardOPEC is a petroleum cartel, a group of oil producing countries whose objective is to coordinate and unify petroleum policies. What type of market structure is a cartel?arrow_forward
- Q1 a) Briefly explain why the discount factor could credibly be interpreted as the probability of successful prosecution but not as an inflation rate. b) Briefly explain why you could calculate from the best-response function of a duopoly the profit of a cartel, that of a duopoly and that of a unilateral deviation from the cartel.arrow_forwardNonearrow_forwardIf South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit would $ to Why are cartel agreements often not successful? Different firms experience different costs. One party has an incentive to cheat to make more profit. All parties would make more money if everyone increased production.arrow_forward
- Table: Three-Country Oil Production Total Market Output (units) Market Price 600 $90 800 80 1,000 70 1,200 60 1,400 50 1,600 40 1,800 30 Suppose that three countries are engaged in oil production. For simplicity, assume zero costs so that revenue equals profit. Assume that the three countries have already formed a cartel, and are collectively producing at the profit maximizing price and quantity. Country A decides to cheat on the cartel agreement by producing 200 more barrels than the other two countries. What is the resultant profit earned by country A? $70,000 $30,000 $24,000 $6,000arrow_forwardThe South American cocaine industry consists of several “families” that obtain the raw material, refine it, and distribute it to the USA. There are only about three large families, but there are several small families. What market structure does the industry most resemble? What predictions based on the market structures can be made about the cocaine business? How do you explain the lack of wars among the families?arrow_forwardIsolated Island has two natural gas wells, one owned by Tom and the other owned by Jerry. Each well has a valve that controls the rate of flow of gas. The marginal cost of producing gas is $12 a unit. The table gives the demand schedule for gas on this island If Tom and Jerry form a cartel and maximize their joint profit, what will be the price of gas and the total quantity produced? If Tom and Jerry form a cartel and maximize their joint profit, the price of a unit of gas is $ and the quantity produced is units a day Q Search Price (dollars per unit) 36 33 30 27 24 21 18 15 Quantity demanded (units per day) 0 1 2 3 4 5 6 7 Nextarrow_forward
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