1. We've talked a lot about OPEC and its control of world oil supply and prices. In one year, the price-per-barrel of oil was $80, while production costs were $20 a barrel. That year, two members of OPEC, Saudi Arabia and Venezuela, produced on average 8 million and 3 million barrels of oil, respectively. Each country could have produced an extra 1 million barrels of oil per day. Doing so would have increased the supply of oil on the market and therefore decreased the price-per-barrel by $10.

A. Each country faced two potential decisions with different effects. Use the information in the question to fill in the profit associated with each choice combination in a payoff table.

B. Which action (producing the extra 1 million barrels or not) should each firm undertake? Why?

C. Is a prisoner's dilemma present in this example? Explain why or why not, briefly.