OPEC (Organization of the Petroleum Exporting Countries) is an international organization and economic cartel whose mission is to coordinate the oil-production policies of its members in order to secure a steady income for them all. Suppose the equation for the demand curve is P = 10 Q, where P is the price per gallon and Q is the quantity demanded per year. The supply curve is horizontal at a price of $4.

(a) Find the competitive level of output, price and total revenue.

(b)With OPEC in place, what is the cartel price, and how many gallons of gasoline are purchased? How much rent is being raised? [Hint: the marginal revenue curve (MR) is given by MR=10-2Q)