Question 1. . . .. . [30 marks] Answer the following questions and briefly explain your reasoning: (a) [6 marks] List 3 factors that may affect the formation and sustainability of a cartel. In what ways would these factors impact the market for a depletable resource? (b) [8 marks] List 2 factors that are relevant to determine why the real world prices of some exhaustible resources (e.g., oil, gas) may deviate from the Hotelling rule. How would these factors affect the prices? (c) [8 marks] If a conservationist would like to delay the date of exhaustion of a de- pletable resource, would she prefer a perfectly competitive or monopoly industry facing the same demand curve? (d) [8 marks] Consider the following cost-benefit analysis table for three actions for pollution control: (1) Action A is the most relaxed option, (2) Action B is stricter than Action A, and (3) Action C is the strictest option out of the three. Based on the values presented, which action (if any) would you choose? Action A Action B Action C Marginal Benefit 1000 500 400 Marginal Cost 100 200 300 Total Benefit 1000 1500 1900 Total Cost 100 300 600 Table 1: CBA for Pollution Control