“Firms have an incentive to form a cartel,but once it is formed,they have an incentive to cheat”Explain the incentives‘to form the cartel’,and‘to cheat after forming the cartel’.
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Q: fail.
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“Firms have an incentive to form a cartel,but once it is formed,they have an
incentive to cheat”Explain the incentives‘to form the cartel’,and‘to cheat after forming the cartel’.
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- "Firms have an incentive to form a cartel but once it is formed, they have an incentive to cheat" Explain the incentives 'to form the cartel', and 'to cheat after forming the cartel'A 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…In the United States cartels are
- Why are cartel agreements often not successful? Different firms experience different costs. All parties would make more money if everyone increased production. One party has an incentive to cheat to make more profit?Which of the following would be cases of cartels? Check All That Apply Ford Motor Company OPEC Major League Baseball Major League Baseball The restaurant industry DeBeers MicrosoftIf south africa increased its production by 1,000 diamonds while russia stuck to the cartel agreement, south africa's profit would Increase or decrease . Why are cartel agreement often not successful? choose on below: a. one party has an incentive to cheat to make more profit. b. different firms experience different cost c. all parties would make more money if everyone increased production
- The demand for a product is Q = 100 P. Initially the marginal cost is MC0 = 40 and the price is P0 = 40. (a) What is the total surplus and If a cartel forms, the price rises to P1 = 70, and the marginal cost stays the same at MC1 = 40. What is the total surplus with a cartel? (b) If a merger happens, the price would become P2 = 70 and the marginal cost would become MC2 = 30. What is the total surplus after the merger? (c) Consider again the merger. Keeping all the others parameters fifixed, for what values of P2 should the merger be allowed? (Your can say something like “the merger should be allowed if P2 is more than 50”, or “the merger should be allowed if P2 is less than 50”.)A certain rural village has numerous small farms which raise livestock. There are two large and equally sized landowners, Jimmy and Bob, which produce hay for the farmers’ animals. Below is the daily village demand for hay Suppose, for simplicity, that Jimmy and Bob have the same constant cost structure, so maximizing total revenue maximizes profit. If Jimmy and Bob initially form a cartel, but subsequently succumb to the temptation to cheat on each other, what will be the Nash equilibrium? Jimmy and Bob will each earn a daily profit of $625. Jimmy will earn a daily profit of $700 and Bob will earn a daily profit of $500. Bob will earn a daily profit of $700 and Jimmy will earn a daily profit of $500. Jimmy and Bob will each earn a daily profit of $525.In order to be successful, a cartel must find a way to encourage members to produce more than they would otherwise produce. agree on the total level of production for the cartel, but they need not agree on the amount produced by each member. agree on the total level of production and on the amount produced by each member. agree on the prices charged by each member, but they need not agree on amounts produced.
- What is a cartel? Explain the coordination problem it faces.8, Cartels which are not backed by strong legal provisions (sanctions) are likely to have a short and turbulent life. Explain why? Briefly for managerial economics classImagine there are two companies, East Wafer and West Wafer, which produce silicon wafers, the base component in the microchips which constitute the brains of our computers. Below is the daily demand for silicon wafers Suppose, for simplicity, East Wafer and West Wafer have the same constant cost structure, so maximizing total revenue maximizes profit. If East Wafer and West Wafer are able to form a cartel and collude without cheating on each other, what will be the price of a silicon wafer? $40 $50 $60 $70
