Bundle: Principles of Microeconomics, Loose-Leaf Version, 7th + Principles of Macroeconomics, Loose-Leaf Version, 7th + MindTap Economics, 2 terms (12 ... for Mankiw’s Principles of Economics, 7th
7th Edition
ISBN: 9781337380300
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 17, Problem 1PA
Subpart (a):
To determine
Equilibrium price .
Subpart (b):
To determine
Calculation of marginal revenue.
Sub part (c):
To determine
Calculation of profit.
Subpart (d):
To determine
What would be the price and quantity of diamond in Russia and South Africa after formation of cartel.
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A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $1,000 per diamond, and the demand for diamonds is described by the following schedule:
Price
Quantity
(Dollars)
(Diamonds)
8,000
5,000
7,000
6,000
6,000
7,000
5,000
8,000
4,000
9,000
3,000
10,000
2,000
11,000
1,000
12,000
If there were many suppliers of diamonds, the price would be___per diamond and the quantity sold would be___diamonds.
If there were only one supplier of diamonds, the price would be___per diamond and the quantity sold would be___diamonds.
Suppose Russia and South Africa form a cartel.
In this case, the price would be___per diamond and the total quantity sold would be___diamonds. If the countries split the market evenly, South Africa would produce___diamonds and earn a profit of___.
If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel…
A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $3,000 per diamond, and the demand for diamonds is described by the following schedule:
Price
Quantity
(Dollars)
(Diamonds)
8,000
3,000
7,000
4,000
6,000
5,000
5,000
6,000
4,000
7,000
3,000
8,000
2,000
9,000
1,000
10,000
If there were many suppliers of diamonds, the price would be______ per diamond and the quantity sold would be _______ diamonds.
If there were only one supplier of diamonds, the price would be ______ per diamond and the quantity sold would be ______ diamonds.
Suppose Russia and South Africa form a cartel.
In this case, the price would be _____ per diamond and the total quantity sold would be _____ diamonds. If the countries split the market evenly, South Africa would produce _____ diamonds and earn a profit of _____ .
If South Africa increased its production by 1,000 diamonds…
A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $1,000 per diamond, and the demand for diamonds is described by the following schedule:
Price ($)
Quantity (diamonds)
8000
5000
7000
6000
6000
7000
5000
8000
4000
9000
3000
10000
2000
11000
1000
12000
a) If there were many suppliers of diamonds, what would be the price and quantity?
b) If there were only one supplier of diamonds, what would be the price and quantity?
c) If Russia and South Africa formed a cartel, what would be the price and quantity? If the countries split the market evenly, what would be South Africa’s production and profit? What would happen to South Africa’s profit if it increased its production by 1,000 while Russia stuck to the cartel agreement?
d) Use your answers to part (c) to explain why cartel agreements are often not successful.
Chapter 17 Solutions
Bundle: Principles of Microeconomics, Loose-Leaf Version, 7th + Principles of Macroeconomics, Loose-Leaf Version, 7th + MindTap Economics, 2 terms (12 ... for Mankiw’s Principles of Economics, 7th
Ch. 17.1 - Prob. 1QQCh. 17.2 - Prob. 2QQCh. 17.3 - Prob. 3QQCh. 17 - Prob. 1CQQCh. 17 - Prob. 2CQQCh. 17 - Prob. 3CQQCh. 17 - Prob. 4CQQCh. 17 - Prob. 5CQQCh. 17 - Prob. 6CQQCh. 17 - Prob. 1QR
Ch. 17 - Prob. 2QRCh. 17 - Prob. 3QRCh. 17 - Prob. 4QRCh. 17 - Prob. 5QRCh. 17 - Prob. 6QRCh. 17 - Prob. 7QRCh. 17 - Prob. 1PACh. 17 - Prob. 2PACh. 17 - Prob. 3PACh. 17 - Prob. 4PACh. 17 - Prob. 5PACh. 17 - Prob. 6PACh. 17 - A case study in the chapter describes a phone...Ch. 17 - Prob. 8PACh. 17 - Prob. 9PA
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