Cartels usually breakdown because of what? Cartels can only be effectively run if they use Game Theory software. They can't control the supply of the good or service. ● ● ● ● They can't control the market price. Usually there is one greedy firm in the cartel that will break the cartel agreement and sell at a lower price to grab as much market share as they can.
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- Consider the curve in the figure below, which shows the market demand. marginal cost, and marginal revenue curve for firms in an oligopolistic industry. In this example, we assume firms have zero fixed costs. Suppose the firms collude to form a cartel. What price will the cartel charge? What quantity will the cartel supply? How much profit will the cartel earn? Suppose now that the cane] breaks up and the oligopolistic firms compete as vigorously as possible by cutting the price and increasing sales. What will be the industry quantity and price? What will be the collective profits of all firms in the industry? Compare the equilibrium price, quantity, and profit for the cartel and cutthroat competition outcomes.Suppose that the central bank for this economy suddenly and unexpectedly decreases the money supply in an effort to reduce inflation. As a result of this unanticipated policy action, actual inflation falls to 3%. On the previous graph, use the black point (plus symbol labeled "B") to illustrate the short-run effects of this policy. Suppose that now, after a period of 3% inflation, households and firms begin to expect that the inflation rate will persist at the level of 3%. On the previous graph, use the purple line (diamond symbol) to draw SRPC₂, the short-run Phillips curve that is consistent with these expectations, assuming that it is parallel to SRPC₂- Finally, using the orange point (square symbol labeled "C"), indicate on the previous graph the new, long-run equilibrium for this economy. The inflation rate at point C is unemployment rate at point A. the inflation rate at point A, and the unemployment rate at point C is Was the central bank able to achieve its goal of lowering…consider the market for oil. Suppose for simplicity that there are only two oil roducing countries-Saudi Arabia and Kuwait. Both countries must choose hether to produce a low output or a high output. These output strategies with corresponding profits are depicted in the ayoff matrix to the right. Kuwait's profits are in red and Saudi Arabia's are in blue. Kuwait Suppose the two countries form a cartel. What is the cooperative equilibrium? Low Output High Output O A. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. $125 $75 Low Output $8 $13 O B. A cooperative equilibrium does not exist for this game. O C. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. Saudi Arabia $98 $70 O D. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. High Output $5 $8 O E. The cooperative equilibrium is for Saudi Arabia to produce…
- bok rint An oligopoly producing a homogeneous product is comprised of three firms that act like a cartel. Assume that these three firms have identical cost schedules. Assume also that if any one of these firms sets a price for the product, the other two firms charge the same price. As long as they all charge the same price they will share the market equally; and the quantity demanded of each will be the same. Below is the total-cost schedule of one of these firms and the demand schedule that confronts it when the other firms charge the same price as this firm. Complete the marginal-cost and marginal- revenue schedules facing the firm. erences Mc Graw Hill Output Total cost Marginal cost Price Quantity demanded Marginal revenue 0 1 23456 7 8 $0 180 300 480 720 1,020 1,380 1,800 2,280 Short Anewor LA JUL 26 $780 720 660 600 540 480 420 360 Toolbar navigation (a) What price would be charged, what output would be produced, and what profit would be made by this firm? (b) If the firms…The Competition Bureau in Canada wants to increase competition and reduce monopoly power. Thus it it worries about industry concentration in Canada. Let's assume that the Canadian halibut processing industry there are only two firms(duopoly). Under such a market structure, if one of the halibut processing firm increases its price, then the other firm in the halibut processing industry can: keep the price of its processed halibut constant and thus increase its market share. keep its price of its processed halibut constant and thus decrease its market share. decrease its price of its processed halibut and thus decrease its market share. try to achieve economies of scale. increase its price of its processed halibut and thus increase its market share.mether to produce a low output or a high output. nese output strategies with corresponding profits are depicted in the ayoff matrix to the right. Kuwait's profits are in red and Saudi Arabia's are in blue. Suppose the two countries form a cartel. What is the cooperative equilibrium? Kuwait O A. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a high output. Low Output High Output O B. A cooperative equilibrium does not exist for this game. $125 $75 Low Output O C. The cooperative equilibrium is for Saudi Arabia to produce a low output and Kuwait to produce a high output. $8 $13 Saudi Arabia O D. The cooperative equilibrium is for Saudi Arabia to produce a high output and Kuwait to produce a low output. $98 $70 E. The cooperative equilibrium is for Saudi Arabia to broduce a low output and Kuwait to produce a low output. High Output What is the Nash equilibrium for this game? O A. The Nash equilibrium is for Saudi Arabia to produce a high…
- Consider a town in which only two residents, Raphael and Susan, own wells that produce water safe for drinking. Raphael and Susan can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price (Dollars per gallon) 3.60 Quantity Demanded Total Revenue (Gallons of water) (Dollars) 3.30 35 $115.50 $210.00 $283.50 $336.00 3.00 70 2.70 105 2.40 140 2.10 175 $367.50 1.80 210 $378.00 1.50 245 $367.50 1.20 280 $336.00 0.90 315 $283.50 0.60 350 $210.00 0.30 385 $115.50 420 Suppose Raphael and Susan form a cartel and behave as a monopolist. The profit-maximizing price is s agreement, Raphael and Susan agree to split production equally. Therefore, Raphael's profit is per gallon, and the total output is gallons. As part of their cartel and Susan's profit is s Suppose that Raphael and Susan have been successfully operating as a cartel. They each charge the monopoly price and sell half of the…Consider the curve in Figure, which shows the market demand, marginal cost, and marginal revenue curve for firms in an oligopolistic industry. In this example, we assume firms have zero fixed costs. a. Suppose the firms collude to form a cartel. What price will the cartel charge? What quantity will the carte supply? How much profit will the cartel earn? b. Suppose now that the cartel breaks up and the oligopolistic firms compete as vigorously as possible by cutting the price and increasing sales. What will be the industry quantity and price? What will be the collective profits of all firms in the industry? c. Compare the equilibrium price, quantity, and profit for the cartel and cutthroat competition outcomes.Price MC 500 700 900 Quantity Five firms in an industry have equal and constant marginal costs and act as a cartel, with each firm agreeing to charge a price of $9. If they each sell an equal quantity of output, each firm will earn $ type your answer in revenue. If one firm decides to increase its quantity sold by 200 units, the cheating firms revenue will increase by $ type your anwer and the remaining firms will see tir total revenue decrease by $ type your anwwer.
- 1. Consider a market for water with two firms. We assume two firms can produce the good without any cost (TC= 0). The market demand schedule is given as: Quantity (gallon) Price ($) 30 90 40 80 50 70 60 60 70 50 80 40 90 30 100 20 110 10 Cartel: Assume that two firms are colluding, so both firms agree upon a contract that they produce the same amount of output. a. How much would each firm produce if they form the cartel? Why?The graph below shows the demand for Cosmic shampoo. ◻ Suppose there are no fixed costs and marginal cost is a constant $30. a. What are the perfectly competitive price and output? Price: $ Output: b. What are the cartel (monopoly) price and output? Price: $ Output: c. If there are only four firms in the cartel, what are the price and output of each firm, assuming equal shares? Round your answers to 1 decimal place. Price: $ Output: Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.PLEASE ANSWER ASAP How do you differentiate Oligopoly from a Monopoly? And how can an oligopoly market earns its profit?