ECON MICRO
5th Edition
ISBN: 9781337000536
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 14, Problem 1.2P
To determine
The reasons for some companies drilling for their own crude oil while the others buying for the same from the market.
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Students have asked these similar questions
(Table: Barrels of Oil) Refer to the table. The change in profit from producing the second barrel of oil is ________, and the marginal cost from producing the seventh barrel of oil is ________.
Q34
(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
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