Use the Following to Answer Questions: Table: Market for Oil

question 222

Multiple Choice

Use the following to answer questions: Table: Market for Oil
Suppose that oil is produced by 10 countries, each of which produces 10 million barrels of oil a day (MBD) for a total 100 MBD. The world price of oil at this quantity is $36 per barrel so each country earns $360 million a day. $$\begin{array} { | c | c | } \hline \text { World Price (per barrel) } & \text { World Quantity (MBD) } \\\hline \$ 36 & 100 \\\hline 37.50 & 98 \\\hline 47.50 & 82 \\\hline 50 & 80 \\\hline\end{array}$$
-(Table: Market for Oil) Refer to the table. Suppose that these countries form a cartel and each country produces 8 MBD. If one of the cartel members cheats by secretly pushing its production back to 10 MBD rather than 8, total revenue for the noncheating countries would:

• A) decrease from $400 million to $380 million a day.
• B) decrease from $360 million to $288 million a day.
• C) increase from $400 million to $500 million a day.
• D) remain unchanged at $380 million a day.

Calculate expected expenses and interpret probabilities in decision-making scenarios.

Understand the importance and method of ranking choices based on risk and expected returns.

Comprehend the application of standard deviation in comparing economic choices.

Grasp how probabilities influence the outcomes of economic decisions.

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Definitions:

Molecular Structure

The spatial arrangement of atoms in a molecule and the chemical bonds that hold the atoms together.

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Referring to a molecule with positive and negative charged ends, resulting from an uneven distribution of electron density.

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