Accounting for supply by the competitive fringe
Course:- Microeconomics
Reference No.:- EM13700128

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Microeconomics

The world willingness to pay for oil is given by P = 200 - Q, with P in dollars per barrel and Q in thousands of barrels per month, and OPEC is planning its strategy to set the world oil price. The competitive fringe of small firms takes the price OPEC sets as given. The fringe marginal cost curve is MC = 40 + Q, and OPEC's marginal cost of producing oil is constant at $20/barrel.

(a) What is the residual demand that OPEC faces after accounting for supply by the competitive fringe?

(b) How much oil will OPEC supply, acting as a cartel?

(c) What is the resulting world oil price?

(d) How much oil is supplied by the competitive fringe?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Microeconomics) Materials
What is a worm as it relates to computer terms which could reproduce and transfer itself into other computers or a virus which could reproduce itself but could not transfer
An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. What kind of gap-inflationary or recessionary-will the economy f
During the most recent election campaign, the conservative party has argued that government can reduce the marginal tax rate in order to raise tax revenue. Why are most econom
Explain The five forces that shape competitive elements in an industry. Review all required readings, including the Weekly Briefing, which provides additional guidance on how
From the two readings, summarize how entrepreneurship impacts economic growth. Please keep in mind that the Bureau of labor Statistics information only goes to 2010 while th
Show how the consumer’s opportunity set changes if income increases by $300. How does the $300 increase in income alter the market rate of substitution between goods X and Y?
During the Civil War, the Confederate States of America printed large amounts of its own currency- Confederate dollars-to fund the war. By the end of the war, the Confederat
A company can purchase a piece of equipment for $1300 today or they can pay for it over a fiver year period with the following schedule: Year 1-$100, Year 2-$200, Year 3-$300,