Homework 3 1. Consider the world oil market, in which a cartel (OPEC) and a competitive fringe (rest of the world) are operating. Suppose that global…

Believe a. is MC=13+.5Q, b. is P1=$40 P2=$55, and c. is P=$40 and Q=30.Need help on d through g.

Homework 31. Consider the world oil market, in which a cartel (OPEC) and a competitive fringe (rest ofthe world) are operating. Suppose that global oil demand and the supply of thecompetitive fringe are given by the following functions:Qw = 70 – P,Qf = -40 + P.Furthermore, suppose that the cartel is comprised of two countries, and let each country’smarginal cost function be as follows:MC, = 13 + Q1,MCz = 13 + Q2-a. Derive the marginal cost function (MC.) of the cartel.(2 pt)b. Calculate the price at which the competitive fringe would be driven out of themarket (P1) and the price at which the cartel would be driven out of the market(Pz).(2 pt)c. Due to the presence of the competitive fringe in the market, there will be a kinkpoint in the demand curve of the cartel. Calculate the price (P) and quantity (@) atwhich this kink occurs.(2 pt)d. Now suppose the inverse demand for the cartel’s output has the followingformula:Po = 55 – 0.5Q to left of the kink point quantity (i.e., Q. < Q),P. = 70 – Q to the right of the kink point quantity (i.e., Q. > Q).Also, suppose the corresponding marginal revenue function of the cartel has thefollowing formula:MR. = 55 – Q to the left of the kink point quantity,MR. = 70 – 20 to the right of the kink point quantity.Use this information to calculate the cartel’s output (Q.) and the price charged perunit of output (P.).(2 pt)C.Calculate the output of the fringe (Q,) at this price.(1 pt)f. Calculate the total output (Q. + Q, ) supplied in the global oil market.(1 pt)g. Calculate the output of each of the two members of the cartel: Q1 and Q2. (2 pt)

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