(Table: Demand for Crude Oil) Look at the Table Demand

question 13

Multiple Choice

(Table: Demand for Crude Oil) Look at the table Demand for Crude Oil.Assume that the crude oil industry is a duopoly and the marginal cost of producing crude oil equals zero.Suppose that the two firms are maximizing industry profit and splitting the profit evenly.If firm 1 decides to cheat and increase production by 10 more barrels, firm 1 will earn profits of:

• A)$6,400.
• B)$6,300.
• C)$3,500.
• D)$2,800.

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Definitions:

Norms

Unwritten rules and expectations that guide behavior within a society or social group.

Lost Profit

Revenue that a business could have gained but was unable to due to some disrupting event or action.

Sales Contract

A legally binding agreement between a seller and a buyer specifying the terms of sale for goods or services.

Market Price

Market price is the current price at which an asset or service can be bought or sold in the open market.