Economics For Today
Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
Question
Chapter 10, Problem 16SQ
To determine

The equilibrium in the market with a cartel.

Blurred answer
Students have asked these similar questions
The table above presents the demand schedule and profits for soft drinks. Suppose the market for soft drinks is a duopoly and the two firms in the market are Coca Cola and Pepsi. Assume Coca Cola and Pepsi make exactly the same soft drinks but with different names: Coke and Pepsi. Assume a constant marginal cost of $200 and no fixed costs. If Coca Cola and Pepsi collude, how many Cokes would Coca Cola produce? [11:52] 100     25     150     75
In your experience and observation of the general market, can you identify two companies locally or nationally you can associate with any of these market structures (Perfect competition market structure, monopoly market structure, monopolistic-competition market structure, oligopoly market structure)? not copy paste
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
Knowledge Booster
Similar questions
  • The opioid epidemic causing a staggering number of deaths each year in the United States is largely caused by two drugs: heroin and fentanyl. Much of the heroin is supplied by several major organized Mexican cartels while the much stronger fentanyl is mostly produced in hundreds of labs (big and small) in China. The market structure for heroin can be considered as an oligopoly that operates as a monopoly. On the other hand, the fentanyl industry is less organized in terms of cartel organization and therefore more competitive. How do the differences in the organization of both industries explain why deaths from fentanyl have skyrocketed in recent years? The organized heroin cartel   A.does not have barriers to market entry. The more competitive fentanyl industry has substantial barriers to entry, making fentanyl a more available drug.   B.has the ability to control quantity and raise the prices. The more competitive fentanyl industry makes more of the drug available at a lower…
    Cartel theory is usually understood as the doctrine of economic cartels. However, since the concept of 'cartel' does not have to be limited to the field of the economy, doctrines on non-economic cartels are conceivable in principle. Explain the cartel theory using an appropriate graph. Indicate the incentive for the oligopoly firms to form a cartel.
    Question 6 (a) Why is Perfect Competition considered to display high level of economic efficiency? (b) How does monopoly result in a dead-weight loss? Illustrate with diagram. (a) How is oligopoly different from monopolistic competition? (b) Illustrate and explain how the oligopolistic firms determines their collective profit by maximizing price and output levels when they collude and act like a cartel (monopoly). Question 7 (a) What are the main causes of market failure? Give one example and illustrate using a diagram. (b) Explain the difference between private costs and social costs. (c) Government of Country X is considering implementing a tax on fizzy drinks. Using a demand and supply diagram, illustrate what effect the tax will have on the market of fizzy drinks. (d) For what purposes does government use taxes-both at micro and macroeconomic level?
  • Compare the welfare of producers, consumers, and society as awhole in an oligopoly to monopoly and perfect competition.
    Consider the curve shown in the figure below, which shows the market demand, marginal cost, and marginal revenue curve for firms in an oligopolistic industry. (MC curve is horizontal because it is assumed that the fixed costs are 0 for all firms and the AVC is constant, so ATC=AVC=MC.) 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 cartel breaks up and the oligopolistic firms compete as vigorously as possible by cutting the price and increasing sales. What will the industry quantity and price be? What will the collective profits be of all firms in the industry? Compare the equilibrium price, quantity, and profit for the cartel and cutthroat competition outcomes.
    ASAP Bertrand competition with differentiated goods. Firms 1,2 with demand functions Q1 = 10 – 3P1 + 2P2 , Q2 = 10 – 3P2 + 2P1 and marginal costs C1 = 6, C2 = 4. i) Find the Nash Equilibrium prices, quantities and individual profits. ii) The firms agree to form a cartel. Find the prices, quantities, cartel profits and individual profits under the cartel agreement. iii) Which firm has a reason to suggest the cartel, and is the cartel sustainable or not? Depict and explain the cartel game in an appropriate way. If it is sustainable, explain. If no, explain and suggest a mechanism that can make it sustainable a) if the deal is for one period only b) if the deal is renewed each period over 5 periods.
    • SEE MORE QUESTIONS
    Recommended textbooks for you
  • Exploring Economics
    Economics
    ISBN:9781544336329
    Author:Robert L. Sexton
    Publisher:SAGE Publications, Inc
    Economics:
    Economics
    ISBN:9781285859460
    Author:BOYES, William
    Publisher:Cengage Learning
  • Exploring Economics
    Economics
    ISBN:9781544336329
    Author:Robert L. Sexton
    Publisher:SAGE Publications, Inc
    Economics:
    Economics
    ISBN:9781285859460
    Author:BOYES, William
    Publisher:Cengage Learning