Purchase Solution

Price and output agreements of cartel

Not what you're looking for?

Ask Custom Question

Over the last 30 years the Organization of Petroleum Exporting Countries (OPEC) has had varied success in forming and maintaining its cartel agreements. Explain how the following factors may contribute to the difficulty of forming and/or maintaining its price and output agreements.
a. New oil fields are discovered and increased drilling is undertaken in the Gulf of Mexico and the North Sea by nonmembers of OPEC.
b. Crude oil is a product that is differentiated by sulfur content: it costs less to refine low-sulfur crude oil into gasoline. Different OPEC countries possess oil reserves of different sulfur content.
c. Cars powered by hydrogen are developed.

Purchase this Solution
Solution Summary

This explains the price and output agreements of cartel

Solution Preview

Explain how the following factors may contribute to the difficulty of forming and/or maintaining its price and output agreements.
a. New oil fields are discovered and increased drilling is undertaken in the Gulf of Mexico and the North Sea by nonmembers of OPEC.

This will increase the difficulty in maintaining the price and output agreements. This ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

View More Free Quizzes
Related BrainMass Solutions

  • Cartel

    This coffee bean cartel is formed to increase the individual profits of the member firms in the cartel as the strategy of decreasing output or supply and increasing price allows each coffee producer to make higher profits than they would have been able

  • current price, output and total cost data

    If demand and cost conditions remain constant, what is the cartel price/ output and profit equilibrium? Please see the attached file. This job examines current price, output and total cost data.

  • Determining the optimal price and output combination

    This conflict makes collusive agreements difficult to maintain. Solutions depict the methodology to find optimal output and price levels in different market structures.

  • Oligopoly: Supply and Demand Problem

    In the diagram below a producer cartel is assumed to fix the cartel price at output Qm and price Pm. The distribution of the cartel output may be allocated on the basis of an output quota system or another process of negotiation.

  • Price Elasticity of Demand and Profit Maximizing Level of Output

    Compute the profit maximizing level of coffee output, the price the cartel should charge, the maximum cartel profits, and the price elasticity at the optimal output.

  • economics

    323958 Coffee Cartel: price elasticity; level of coffee output, price, profits, optimal output In 1991, Brazil and Columbia united to form a coffee cartel and reduce coffee output.

  • Illegal Collusions in US

    Cartels are generally made for the price and production fixing. The allocation of territories and customers are also the part of the cartel.

  • Monopoly increases profits through licensing

    At Qty 6 and price $14, the profit will be $12. So on. Between these choices, the cartel should produce at 4 and sell it at a price of $16. A table of costs and profits for a monopoly is provided and optimal solutions are found for the monopoly.

  • Pricing and Output Decisions: Supply and Demand

    Benefits of cartel (seller's point of view) can be significant if is able to keep its member units intact. Each member has the opportunity to break the cartel and increase its output to earn more.

View More Related Solutions