In 2008, Saudi Arabia and Venezuela (both members of OPEC) produced an average of 8 million and 3 million barrels of oil a day, respectively. Production costs were about $10 per barrel and the price of oil averaged $28 per barrel. Each country had the capacity to produce an additional 1 million barrels per day. At that time, it was estimated that each 1-million- barrel increase in supply would depress the average price of oil by $3.

a. Fill in the missing profit entries in the payoff table.

b. What actions should each country take and why?

c. Does the asymmetry in the countries' sizes cause them to take different attitudes toward expanding output? Explain why or why not. Comment on whether or not a prisoner's dilemma is present. Venezuela 3 M barrels 4 M barrels 8 M barrels Saudi Arabia 9 M barrels