The diagram below illustrates the international tin market.Assume that the producing and consuming countries establish an international commodity agreement under which the target price of tin is $5 per pound.
Figure 7.2.Defending the Target Price in Face of Changing Supply Conditions
-Consider Figure 7.2.Assume there exists a cartel of several producers that is maximizing total profit.If one producer cheats on the cartel agreement by decreasing its price and increasing its output,rational action of the other producers is to:
Definitions:
Hindsight Bias
The tendency to believe, after learning an outcome, that one would have foreseen it, also known as the "I-knew-it-all-along" effect.
Retroactive Interference
The phenomenon where newly learned information interferes with the recall of previously learned information.
Just World Hypothesis
The belief that the world is fundamentally fair, leading individuals to rationalize an unjust situation as having been deserved by the victim.
Fundamental Attribution Error
The inclination to place undue importance on individual traits while overlooking the influence of environmental contexts when evaluating the actions of others.
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