Use the Following to Answer Questions: Table: Three-Country Oil Production

question 55

Multiple Choice

Use the following to answer questions: Table: Three-Country Oil Production $$\begin{array} { | c | c | } \hline \text { Total Market Output } & \text { Market Price } \\\hline 600 & 90 \\\hline 800 & 80 \\\hline 1,000 & 70 \\\hline 1,200 & 60 \\\hline 1,400 & 50 \\\hline 1,600 & 40 \\\hline 1,800 & 30 \\\hline\end{array}$$
-(Table: Three-Country Oil Production) Refer to the table. Suppose that three countries are engaged in oil production. For simplicity, assume zero costs so that revenue equals profit. Suppose that Country A cheats on the cartel agreement by producing 200 more barrels than the other two countries. What would Country B's reaction be?

• A) lower its own quantity to 200 units
• B) increase its own quantity to 1,600 units
• C) increase the market price to $60
• D) increase its own quantity to 600 units

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Definitions:

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A theoretical model proposed by Hans Selye that describes the body's physiological response to stress in three stages: alarm, resistance, and exhaustion.

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