Refer to the information provided in Figure 14.1 below to answer the question(s) that follow. Demand and cost conditions for the Chewing Gum Industry $4 MC .40 .35 .31 3.30 ATC D .25 MR Q Packs of chewing gum in thousands 12 14 16 Figure 14.1 Refer to Figure 14.1. Six firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. To maximize profits, the cartel should produce packs of chewing gum and the price should be O a. 14,000; $.30 O b. 12,000; $.40 O c. 16,000; $.35 O d. 12,000; $.25 Dollars.

Refer to the information provided in Figure 14.1 below to answer the question(s) that follow. Demand and cost conditions for the Chewing Gum Industry $4 MC .40 .35 .31 3.30 ATC D .25 MR Q Packs of chewing gum in thousands 12 14 16 Figure 14.1 Refer to Figure 14.1. Six firms that produce chewing gum form a cartel. The cartel faces the market demand curve given by D. To maximize profits, the cartel should produce packs of chewing gum and the price should be O a. 14,000; $.30 O b. 12,000; $.40 O c. 16,000; $.35 O d. 12,000; $.25 Dollars.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter15: Oligopoly And Strategic Behavior

Section: Chapter Questions

Problem 7P

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The table shows the demand schedule for a particular product. Quantity Price 0 100 300 90 600 80 900 70 1200 60 1500 50 1800 40 2100 30 2400 20 2700 10 3000 0 Suppose the market for this product is served by two firms who have formed a cartel and are colluding to set the price and quantity in this market. If the marginal cost to produce this product is constant at $40 per unit, then what price will the cartel set in this market? a. $40 b. $50 c. $60 d. $70 e. $80
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.
The graph below shows the demand for Cosmic shampoo. Suppose there are no fixed costs and marginal cost is a constant $80.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:
4. Imagine a market with demand P = 420 – Q in each period. Two firms are thinking about colluding. They each have cost C(Qi) = 60Qi. If they cooperate and behave as a monopoly, then they have a marginal revenue curve, MRm = 420 – 2Q, and a marginal cost curve, MCm = 60. If they are in a cartel, then the firms will split the monopoly production and profits. If they compete, then they face MRi = 420 – 2Qi – Q-I and MCi = 60. a. If the firms stick to their agreement (cooperate), how much per-period profit do they each make? b. If they are not able to maintain their agreement (compete), what is their per-period profit? c. If one firm cheats on their agreement (deviate), how much does each firm make? Be sure to specify both the profit for the cheater and the firm cheated-on. d. Suppose the firms assume that their interaction will last forever (r = 1) and they share the common discount value R. What is the lowest value of R such that both firms are willing to continue with the cartel…
4. Imagine a market with demand P = 420 – Q in each period. Two firms are thinking about colluding. They each have cost C(Qi) = 60Qi. If they cooperate and behave as a monopoly, then they have a marginal revenue curve, MRm = 420 – 2Q, and a marginal cost curve, MCm = 60. If they are in a cartel, then the firms will split the monopoly production and profits. If they compete, then they face MRi = 420 – 2Qi – Q-I and MCi = 60. d)Suppose the firms assume that their interaction will last forever (r = 1) and they share the common discount value R. What is the lowest value of R such that both firms are willing to continue with the cartel agreement described above?
Question 2Bob and Alice are duopoly competitors for ice cream in Venice Beach,CA. Market demand for ice cream is p = 1000 − 2Q and both Alice’sand Bob’s costs of production are identical and given by C(q) = 4q.Calculate market price and quantity ifc) Alice and Bob decide to coordinate their decisions in a cartel (i.e.to build a monopoly) and to equally share profits.
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Suppose demand is Q = 10000 - 1000P and marginal cost is constant at MC=6. From the given demand curve, one can compute the following marginal revenue curve: MR = 10 - Q/500 c. Calculate the price and quantity associated with point M, the monopoly/perfect cartel outcome. Compute industry profit, consumer surplus, social welfare, and deadweight loss. d. Calculate the price and quantity associated with point A, a hypothetical imperfectly competitive outcome, assuming that it lies at a price halfway between C and M.Compute industry profit, consumer surplus, social welfare, and deadweight loss.
The table shows a hypothetical demand schedule for monosodium glutamate (MSG). Ajinomoto holds 5050% of the market, Jiali holds 3030% of the market, and Quingdao holds 2020% of the market. Suppose the three firms agree to form a cartel to fix production of monosodium glutamate. Assume marginal cost equals zero, and the output is split equally across the firms. What quantity maximizes the cartel's profit? Price of MSG ($ per pound) Quantity of MSG demanded (millions of pounds) $8$8 00 $7$7 2020 $6$6 3030 $5$5 4040 $4$4 6060 $3$3 9090 $2$2 110110 $1$1 180180 $0$0 300300 million pounds million pounds Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero. How would this affect the incentive of Ajinomoto to act noncooperatively and change its output? Ajinomoto will not have an incentive to change its output. Ajinomoto will have an incentive to increase its output of MSG.…
Organization of the Petroleum Exporting Countries (OPEC) is an example of Cartel that can control the world oil prices. Describe THREE (3) criteria for OPEC to succeed in controlling the world oil prices.
Refer to Figure 13.1. Suppose demand is Q = 10000 - 1000P and marginal cost is constant at MC=6. From the given demand curve, one can compute the following marginal revenue curve: MR = 10 - Q/500 a. Graph the demand, marginal cost, and marginal revenue curves. b. Calculate the price and quantity associated with point C, the perfectly competitive outcome. Compute industry profit, consumer surplus, and social welfare. c. Calculate the price and quantity associated with point M, the monopoly/perfect cartel outcome. Compute industry profit, consumer surplus, social welfare, and deadweight loss. d. Calculate the price and quantity associated with point A, a hypothetical imperfectly competitive outcome, assuming that it lies at a price halfway between C and M.Compute industry profit, consumer surplus, social welfare, and deadweight loss.
20. Using two carefully drawn and labeled diagrams, analyze an input cartel. That is, on the left side of the page, draw a diagram for one of the firms, and on the right side, draw a diagram for the labor market. Indicate the equilibrium wage and employment for the market if the labor market is competitive, (WC , LC), and the corresponding outcome for a firm, (WC, lC). Then, explain how the cartel adjusts the wage and employment.