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(Table: Demand for Crude Oil) Use Table: Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil is zero.If the two firms collude to share the market equally,the price of crude oil will be _____,firm 1 will produce _____ barrels,firm 2 will produce _____ barrels,and each firm will earn revenue equal to _____.
A) $80;80;80;$6,400
B) $80;40;40;$3,200
C) $60;50;50;$3,000
D) $40;60;60;$2,400
Collude
The act of cooperating or working together secretly, especially in order to cheat or deceive others.
Crude Oil
A natural fossil fuel consisting of hydrocarbon deposits and other organic materials, used primarily for energy and as a raw material in chemicals.
Revenue
The total amount of money that a company receives from its activities, usually from the sale of goods and services to customers.
- Explore the repercussions of collusion among businesses on market prices, outputs, and profitability.
- Gain insight into the way distinct market configurations (monopoly, duopoly, oligopoly) affect the decisions firms make regarding pricing and output.
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Learning Objectives
- Explore the repercussions of collusion among businesses on market prices, outputs, and profitability.
- Gain insight into the way distinct market configurations (monopoly, duopoly, oligopoly) affect the decisions firms make regarding pricing and output.
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