In mid-2010, Saudi Arabia and Venezuela (both members of OPEC) produced an average of 8 million and 3 million barrels of oil a day, respectively. Production costs were about $20 per barrel, and the price of oil averaged $80 per barrel. Each country had the capacity to produce an extra 1 million barrels per day. At that time, it was estimated that each 1-million-barrel increase in supply would depress the average price of oil by $10. a. Fill in the missing profit entries in the payoff table. b. What actions should each country take and why?Venezuela 3 M barrels 4 M barrels 8 M barrels _____, _____ _____, _____ Saudi Arabia 9 M barrels _____, _____ _____, _____ c10GameTheoryandCompetitiveStrategy.qxd 9/29/11 1:33 PM Page 430 Summary 431 c. Does the asymmetry in the countries’ sizes cause them to take different attitudes toward expanding output? Explain why or why not. Comment on whether or not a prisoner’s dilemma is present

In mid-2010, Saudi Arabia and Venezuela (both members of OPEC) produced an average of 8 million and 3 million barrels of oil a day, respectively. Production costs were about $20 per barrel, and the price of oil averaged $80 per barrel. Each country had the capacity to produce an extra 1 million barrels per day. At that time, it was estimated that each 1-million-barrel increase in supply would depress the average price of oil by $10. a. Fill in the missing profit entries in the payoff table. b. What actions should each country take and why?Venezuela 3 M barrels 4 M barrels 8 M barrels ___, _ _, _ Saudi Arabia 9 M barrels _, _ _, ___ c10GameTheoryandCompetitiveStrategy.qxd 9/29/11 1:33 PM Page 430 Summary 431 c. Does the asymmetry in the countries’ sizes cause them to take different attitudes toward expanding output? Explain why or why not. Comment on whether or not a prisoner’s dilemma is present

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 16CTQ: Would you rather have efficiency or variety? That is, one opportunity cost of the variety of...

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Suppose that Darnell and Eleanor are the only suppliers of pizza slices in a particular market. The following table shows their weekly supply schedules: Price Darnell's Quantity Supplied Eleanor's Quantity Supplied (Dollars per slice) (Slices) (Slices) 1 0 4 2 4 7 3 6 9 4 7 10 5 8 11 On the following graph, plot Darnell's supply of pizza slices using the green points (triangle symbol). Next, plot Eleanor's supply of pizza slices using the purple points (diamond symbol). Finally, plot the market supply of pizza slices using the orange points (square symbol). Note: Line segments will automatically connect the points. Remember to plot from left to right.