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Cartel A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $3,000 per diamond, and the demand for diamonds is described by the following schedule: Price Quantity (Dollars) (Diamonds) 8,000 3,000 7,000 4,000 6,000 5,000 5,000 6,000 4,000 7,000 3,000 8,000 2,000 9,000 1,000 10,000
1. If there were many suppliers of diamonds, the price would beper diamond and the quantity sold would bediamonds.
2. If there were only one supplier of diamonds, the price would beper diamond and the quantity sold would bediamonds. Suppose Russia and South Africa form a cartel.
3. In this case, the price would beper diamond and the total quantity sold would be ____??? diamonds. If the countries split the market evenly, South Africa would produce ____??? diamonds and earn a profit of $___???.
4. If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit would DECREASE OR INCREASE to $____???.
5. Why are cartel agreements often not successful? CHOOSE ONE
One party has an incentive to cheat to make more profit.
Different firms experience different costs.
All parties would make more money if everyone increased production.

Respuesta :

Well if you think about it in the long run the darkness shall take over in about 44 years from now
anthougo

1. If there were many suppliers of diamonds, the price would be $3,000 per diamond and the quantity sold would be 8,000 diamonds.

2. If there were only one supplier of diamonds, the price would be $6,000 per diamond and the quantity sold would be 5,000 diamonds.

Suppose Russia and South Africa form a cartel.

3. In this case, the price would be $6,000 per diamond and the total quantity sold would be 5,000 diamonds. If the countries split the market evenly, South Africa would produce 2,500 (5,000/2) diamonds and earn a profit of $7,500,000 (2,500 x $3,000).

4. If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit would DECREASE  to $7,000,000 (3,500 * $2,000).

In this situation, South Africa will produce 3,500 and Russia 2,500 diamonds.  The total quantity produced will be 6,000 and price will then reduce to $5,000 per diamond.  The profit margin will reduce to $2,000 per diamond ($5,000 - $3,000) from $3,000 per diamond as in 3 above.

5. Cartel agreements are often not successful because  One party has an incentive to cheat to make more profit.

Thus, the incentive is for producers to maximize profits always, where the marginal revenue (MR) is equal or greater than the marginal cost (MC).

Learn more about marginal revenue and marginal cost here: https://brainly.com/question/16615264

Data and Calculations:

Marginal cost of mining diamonds = $3,000 per diamond

Schedule of Demand for Diamonds

   Price       Quantity    Total Revenue      Marginal

(Dollars)   (Diamonds)      TR                     Revenue

 P                  Q              = P x Q               MR = ΔTR/AQ

8,000          3,000         $24 million         -

7,000          4,000           28 million         4,000 ($4,000,000/1,000)

6,000         5,000           30 million         2,000 ($2,000,000/1,000)

5,000         6,000           30 million         0        ($0/1,000)

4,000         7,000           28 million         2,000 (-$2,000,000/1,000)

3,000         8,000           24 million        -4,000  (-$4,000,000/1,000)

2,000        9,000            18 million        -6,000 (-$6,000,000/1,000)

1,000       10,000            10 million        -8,000 (-$8,000,000/1,000)

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