EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 12, Problem 5RQ
To determine
The fraud that may be done by a cartel member.
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Students have asked these similar questions
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.
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?
Why has the OPEC oil cartel succeeded in raising prices substantially while the CIPEC copper cartel has not? What conditions are necessary for successful cartelization?
Chapter 12 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 12.2 - Prob. 1TTACh. 12.2 - Prob. 2TTACh. 12.2 - Prob. 1MQCh. 12.2 - Prob. 2MQCh. 12.2 - Prob. 1.1TTACh. 12.2 - Prob. 2.1TTACh. 12.2 - Prob. 1.1MQCh. 12.3 - Prob. 1MQCh. 12.3 - Prob. 2MQCh. 12.3 - Prob. 1TTA
Ch. 12.3 - Prob. 2TTACh. 12.3 - Prob. 1.1MQCh. 12.3 - Prob. 2.1MQCh. 12.3 - Prob. 1.1TTACh. 12.3 - Prob. 2.1TTACh. 12.4 - Prob. 1TTACh. 12.4 - Prob. 2TTACh. 12.5 - Prob. 1MQCh. 12.5 - Prob. 2MQCh. 12.5 - Prob. 1TTACh. 12.5 - Prob. 2TTACh. 12.6 - Prob. 1MQCh. 12.6 - Prob. 2MQCh. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQCh. 12 - Prob. 12.1PCh. 12 - Prob. 12.2PCh. 12 - Prob. 12.3PCh. 12 - Prob. 12.4PCh. 12 - Prob. 12.5PCh. 12 - Prob. 12.6PCh. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Prob. 12.10P
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- assuming that you own one of three gas stations in a little town and you and the other gas station owners decide you want to "help each other out" so everyone can make more money." What arrangements could you make so that all three owners make more money? Would these arrangements make the three gas stations a cartel?arrow_forwardWould you expect the kinked demand curve to be more extreme (like a right angle) or less extreme (like a normal demand curve) if each firm in the cartel produces a near-identical product like OPEC and petroleum? What if each firm produces a somewhat different product?arrow_forwardIf a group of sellers could form a cartel, what quantity and price would they try to set? What is the prisoner's dilemma, and what does it have to do with oligopoly?arrow_forward
- Describe how drug cartels are able to recruit new members when their members are murdered.arrow_forwardDiscuss the possible deviations from perfect competition and then focus on oligopolies. How can cartels coordinate to affect markets? What affects antitrust enforcers’ ability to detect cartels? Discuss with reference to one or more examples.arrow_forwardWhen OPEC raised the price of oil dramatically in the mid-1970s, experts said it was unlikely that the cartel could stay together over the long term—that the incentives for individual members to cheat would become too strong. More than forty years later, OPEC still exists. Why do you think OPEC has been able to beat the odds and continue to collude? Hint: You may wish to consider non-economic reasons. Hint: You may wish to consider non-economic reasons.arrow_forward
- Is it possible that the violent members of the drug cartels can behave like cartels in legitimate markets?arrow_forwardWhat is a cartel? Explain the coordination problem it faces.arrow_forwardAs the number of firms in an oligopoly industry decreases, the market moves closer to a __________ market. Over the last 60 or so years, the percentage of women with paid jobs has increased significantly. Is this increase in female employment associated with an increase in the demand for labor, or is it associated with an increase in the supply of labor? How does increased immigration affect the labor market? How would the equilibrium wage and the equilibrium quantity of labor be affected?arrow_forward
- The attached diagram illustrate an industry under oligopoly consisting of 10 equal-sized firms, and a particular firm in that industry. Each of the firms produces an identical product. Assuming the firms form a cartel, what price will the cartel choose if it wishes to maximize overall profits for the cartel? What total output must the cartel produce in order to maintain this price? To what output will an individual firm be restricted if the price is to be maintained?Assume that all firms are permitted to produce the same level of output. If the other firms stick to this output, how much would an individual firm be tempted to produce if it wished to maximize its own profit at the agreed price? If it undercut the cartel price, what and output would maximize its profit 9assuming the other members did not retaliate)?arrow_forwardWould you expect the kinked demand curve to be more extreme (like a right angle) or less extreme (like a normal demand curve) if each firm in the cartel produces a near-identical product like petroleum? What if each firm produces a somewhat different product? Explain.arrow_forwardHow can a kinked demand curve indicate that the firms in the oligopoly will continue to behave as a cartel and not have an incentive to deviate from the cartel? If the firms in the oligopoly collude to restrict output, the firms implicitly agree to increase prices if a firm in the oligopoly increases prices. If the firms in the oligopoly collude to restrict output, the firms implicitly agree to cut prices if a firm in the oligopoly cuts prices. If the firms in the oligopoly collude to restrict output, the firms implicitly agree to cut the quantity produced if a firm in the oligopoly cut prices. If the firms in the oligopoly collude to restrict output, the firms implicitly agree to increase quantity if a firm in the oligopoly increases prices.arrow_forward
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