Attempts $$ Keep the Highest $/5$

$2.$ Oligopolies: Pricing Strategies

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:

$\backslash$table$[[\backslash$table$[[$Price$],[($Dollars$)]],\backslash$table$[[$Quantity$],[($Dlamonds$)]]],[8,000,3,000],[7,000,4,000],[8,000,5,000],[5,000,6,000],[4,000,7,000],[3,000,8,000],[2,000,9,000],[1,000,10,000]]$

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

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

Suppose Russia and South Africa form a cartel,

In this case, the price would be $$ per diamond and the total quantity sold would be evenly, South Africa would produce $$ diamonds and earn a profit of

$$ diamonds. If the countries split the market

If South Africa increased its production by $1,000$ diamonds while Russia stuck to the cartel agreement, South Africa's profit wouk $$ to

Why are cartel agreements often not successful?

One party has an incentive to cheat to make more profit.

All parties would make more money if everyone increased production.

Different firms experience different costs.

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