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
Explain why scarcity forces individuals and society to incur opportunity costs. Give specific examples. (2.5 marks for explanation and diagram plus 2.5 marks for specific exam
Suppose a second firm enters the market. Let Ql be the output of the first firm and Q2 be the output of the second. Market demand is now given by Ql + Q2 = 53-P Assuming that
When choosing between bundles of beer and pizza, I always look first at the amount of pizza and choose the bundle with the largest amount of pizza. If any two bundles have t
Evaluate trends in demand over time and explain their impact on the industry and the firm. You should consider including annual sales figures for the product your firm sells
Discuss in general the appropriate metrics that one may require to track. Also explain how investing in IT with an eyes towards the replacement or automation of another projec
Submit solutions to the following two problems.  Submit in an Excel workbook with each problem in a separate worksheet (tab).  Show your calculations in Excel.  That is, use E
Describe a situation of incentive misalignment that you have personally observed (ideally in your personal work environment, but could also be in a relationship, in the cons
How does the nominal depreciation affect the relative price of domestic goods (i.e., the real exchange rate)? Given your answer, what effect would a nominal deprecia- tion l