(Answered)-1. The OPEC cartel is trying to determine the total amount of oil - (2025 Updated Original AI-Free Solution

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See attachment it didn't come out too well in the body of this.

1. The OPEC cartel is trying to determine the total amount of oil to sell on the world market. It estimates world demand for oil to be Q_w = 80 - 2P, where Q_w denotes the quantity of oil (in millions of barrels per day) and P is price per barrel. The cartel's marginal cost is approximately $10 per barrel.
   1. Determine OPEC's profit-maximizing output and price.
   2. OPEC's economist recognizes the importance of non-OPEC oil supplies. These can be described by the estimated supply curve??????????????????????????????? ????????????????????????????????????

Q_s =? 4P - 28. Write OPEC's net demand curve. Find its optimal output and price. What portion of the world's total oil supply comes from OPEC?

1. Some countries like Spain engage in expansive monetary policy to stimulate the economy. What was the effect of this policy on the interest rate, the exchange rate and output? Because of this Spain's irresponsible monetary policy, Spain was in risk of not keeping the exchange rate inside the bands. How could the Spanish government use fiscal & monetary policies to avoid this from happening? Draw graphs to support your answers.

Consider a father who is trying to discipline his child. The father insists that the child must go with the rest of the family to visit their grandmother. The child prefers to go to the movies with a friend. The father threatens to punish the child if the child doesn?t visit the grandmother. If the child goes with the family to visit the grandmother, both the child and the father receive one unit of utility. If the child refuses to go to the grandmother?s house, and the father punishes the child, the child receives one unit of utility, and the father receives one unit of utility. If the child refuses to go and the father relents (does no punish), the child receives two units of utility, and the father receives none.

Draw the game in matrix form.

Draw the game in extensive form.

Solve the game via backward induction.

The Ulysses Corporation and the Xenophon Company are the only producers of a sophisticated type of camera. They each can engage in either a high or a low level of advertising in trade journals. The payoff matrix is as follows:

	Xenophon Company
		Low Level	High Level
Ulysses Corporation	Low level	$12 mm, $13 mm	$11 mm, $12 mm
High level	$13 mm, $12 mm	$12 mm, $11 mm

Will Ulysses engage in a high or a low level of advertising in trade journals?

Will Xenophon engage in a high or low level of advertising in trade journals?

Is there a dominant strategy for each firm?

1. Consider the following information on our monetary system:

total bank reserves	$60 billion
required reserves	$55 b.
checkable deposits	$1,000 b.
currency in circulation (inc. traveler's checks)	$550 b.
small time deposits, savings accounts, and money market funds	$2,340 b.

What is the amount of the money supply, M1, in dollars?

What is the amount of the money supply, M2, in dollars?

What is the amount of the monetary base (MB) in dollars?

Suppose the Federal Reserve wants to increase the money supply by $15 billion. Should it conduct an open market purchase or sale? What should be the approximate amount of the purchase or sale?

Will this action tend to increase or decrease interest rates?

1. The OPEC cartel is trying to determine the total amount of oil to sell on
the world market. It estimates world demand for oil to be Qw = 80 - 2P,
where Qw denotes the quantity of oil (in millions of barrels per day) and
P is price per barrel. The cartel's marginal cost is approximately $10
per barrel.
a. Determine OPEC's profit-maximizing output and price.
b. OPEC's economist recognizes the importance of non-OPEC oil
supplies. These can be described by the estimated supply curve
Qs = 4P - 28. Write OPEC's net demand curve. Find its optimal
output and price. What portion of the world's total oil supply
comes from OPEC?
2. Some countries like Spain engage in expansive monetary policy to
stimulate the economy. What was the effect of this policy on the
interest rate, the exchange rate and output? Because of this Spain's
irresponsible monetary policy, Spain was in risk of not keeping the
exchange rate inside the bands. How could the Spanish government
use fiscal & monetary policies to avoid this from happening? Draw
graphs to support your answers.
3. Consider a father who is trying to discipline his child. The father insists
that the child must go with the rest of the family to visit their
grandmother. The child prefers to go to the movies with a friend. The
father threatens to punish the child if the child doesn?t visit the
grandmother. If the child goes with the family to visit the grandmother,
both the child and the father receive one unit of utility. If the child
refuses to go to the grandmother?s house, and the father punishes the
child, the child receives one unit of utility, and the father receives one
unit of utility. If the child refuses to go and the father relents (does no
punish), the child receives two units of utility, and the father receives
none.
a. Draw the game in matrix form.
b. Draw the game in extensive form.
c. Solve the game via backward induction.

4. The Ulysses Corporation and the Xenophon Company are the only producers of a
sophisticated type of camera. They each can engage in either a high or a low level of
advertising in trade journals. The payoff matrix is as follows:
Xenophon Company
Low Level
Low level

$12 mm, $13 mm

$11 mm, $12 mm

High level

Ulysses
Corporation

High Level

$13 mm, $12 mm

$12 mm, $11 mm

a. Will Ulysses engage in a high or a low level of advertising in
trade journals?
b. Will Xenophon engage in a high or low level of advertising in
trade journals?
c. Is there a dominant strategy for each firm?
5. Consider the following information on our monetary system:
total bank reserves

$60
billion

required reserves

$55 b.

checkable deposits

$1,000 b.

currency in circulation (inc. traveler's
checks)

$550 b.

small time deposits, savings
accounts, and money market funds

$2,340 b.

a. What is the amount of the money supply, M1, in dollars?
b. What is the amount of the money supply, M2, in dollars?
c. What is the amount of the monetary base (MB) in dollars?
d. Suppose the Federal Reserve wants to increase the money
supply by $15 billion. Should it conduct an open market purchase
or sale? What should be the approximate amount of the purchase
or sale?

e. Will this action tend to increase or decrease interest rates?