2. In a cartel, like OPEC, producers collaborate to set industry output and then allocate quotas to the cartel members. The cartel model is applied to OPEC, where the intention is to mimic a monopoly. Refer to the figure below. a. Identify the competitive equilibrium for OPEC (using PC and QC ) in each respective box on the graph above. Which point (A-J) corresponds with the competitive market equilibrium for OPEC? b. Identify the quantity of output an individual member (using qc ) produces in a competitive market in the respective box on the graph above. Which point (A-J) helped you identify the competitive quantity of output for an individual member? Explain the significance of that point. c. Identify the monopoly equilibrium for OPEC (using PM and QM ) in each respective box on the graph above. Which point (A-J) corresponds with the monopoly market equilibrium for OPEC? d. Identify the monopoly price an individual member faces (using PN ) in the respective box on the graph above. What does the box with the arrow identify on the graph for an individual member? Explain and label the box with the arrow on the graph above. e. Identify the quota quantity an individual member produces (using qm ) in the respective box on the graph above. Identify the average cost an individual member incurs at the quota quantity (using AC ) in the respective box on the graph above. f. What area corresponds with the DWL associated with OPEC operating as a cartel in the oil market? Use points from the graph to answer. g. Identify the most profitable quantity an individual member can produce (using qcheat ) in the respective box on the graph above. Explain why that quantity is the most profitable for an individual member. h. Identify the quantity of output OPEC would produce if all firms cheat (using Qcheat ) in the respective box on the graph above. Explain what happens if OPEC produces Qcheat, and mention the long run effects of producing at Qcheat. Analyze the cartel model by explaining what the model captures and what it does not capture about historic OPEC behavior. 2. In a cartel, like OPEC, producers collaborate to set industry output and then allocate quotas to the cartel members. The cartel model is applied to OPEC, where the intention is to mimic a monopoly. Refer to the figure below. a. Identify the competitive equilibrium for OPEC (using PC and QC ) in each respective box on the graph above. Which point (A-J) corresponds with the competitive market equilibrium for OPEC? b. Identify the quantity of output an individual member (using qc ) produces in a competitive market in the respective box on the graph above. Which point (A-J) helped you identify the competitive quantity of output for an individual member? Explain the significance of that point. c. Identify the monopoly equilibrium for OPEC (using PM and QM ) in each respective box on the graph above. Which point (A-J) corresponds with the monopoly market equilibrium for OPEC? d. Identify the monopoly price an individual member faces (using PN ) in the respective box on the graph above. What does the box with the arrow identify on the graph for an individual member? Explain and label the box with the arrow on the graph above. e. Identify the quota quantity an individual member produces (using qm ) in the respective box on the graph above. Identify the average cost an individual member incurs at the quota quantity (using AC ) in the respective box on the graph above. f. What area corresponds with the DWL associated with OPEC operating as a cartel in the oil market? Use points from the graph to answer. g. Identify the most profitable quantity an individual member can produce (using qcheat ) in the respective box on the graph above. Explain why that quantity is the most profitable for an individual member. h. Identify the quantity of output OPEC would produce if all firms cheat (using Qcheat ) in the respective box on the graph above. Explain what happens if OPEC produces Qcheat, and mention the long run effects of producing at Qcheat. Analyze the cartel model by explaining what the model captures and what it does not capture about historic OPEC behavior