7. Suppose that the marginal cost of mining gold is constant at $300 per ounce and the demand schedule is as follows:

Price (per oz.) Quantity (oz.)

$1,000 1,000

$900 2,000

$800 3,000

$700 4,000

$600 5,000

$500 6,000

$400 7,000

$300 8,000

a. If the number of suppliers is large, what would be the price and quantity?

b. If there is only one supplier, what would be the price and quantity?

c. If there are only two suppliers and they form a cartel, what would be the price and quantity?

d. Suppose that one of the two cartel members in part

(c) decides to increase its production by 1,000 ounces while the other member keeps its production constant. What will happen to the revenues of both fi rms?