OPEC,  the organization of petroleum exporting countries,  o…

OPEC,  the organization of petroleum exporting countries,  opted to keep its output unchanged,  expressing confidence in the market despite global supply strains that kept prices high.    OPEC kept its production at 30 million barrels per day.  A.  Explain how OPEC is acting like a single firm monopoly B.  Suppose Saudi Arabia,  “cheated” on its agreement and decided to  increase its production.  Why would Saudi Arabia choose to do this?  Explain using your understanding of revenue, costs and profits for a oligopoly firm. C.  Explain, using demand and supply analysis what happens in the overall market for oil after Saudi Arabia’s action.  (Note: you don’t have to submit a graph (but you can).  However, you must clearly explain your shifts, direction and what happens to price and quantity as a result.)

  Total Output Price Marginal Revenue Average Total Cost…

  Total Output Price Marginal Revenue Average Total Cost Marginal Cost 1 $ 100 $ 100 $ 100.00 $ 30 2 90 80 63.00 26 3 80 60 52.67 32 4 70 40 49.50 40 5 60 20 49.60 50 6 50 0 50.00 52 7 40 −20 52.29 66 8 30 −40 55.75 80 9 20 −60 60.67 100 10 10 −80 67.60 130   Refer to the data above for a nondiscriminating monopolist.  a)  What level of output should the monopolist produce at to maximize profit?  How do you know? b)  Is this monopolist earning profit?  How do you know? c)  Name an industry that the above table could apply to?  What could be the source of this firm’s monopoly power?