Reference: Ref 15-3 (Table: Three-Country Oil Production) Refer to the Table

question 26

Multiple Choice

Reference: Ref 15-3 (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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