normal demand curve) if each firm in the cartel produces a near-identical product like OPEC and

petroleum? What if each firm produces a somewhat different product? Explain your reasoning.

18. When OPEC raised the price of oil dramatically in the mid-1970s, experts said it was unlikely that the

cartel could stay together over the long term—that the incentives for individual members to cheat would

become too strong. More than forty years later, OPEC still exists. Why do you think OPEC has been able to
beat the odds and continue to collude? Hint:You may wish to consider non-economic reasons.
256 10 • Problems

Problems

19. Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to

charge to maximize profits. The first two columns in Table 10.5 provide the price and quantity for the

demand curve for treatments. The third column shows its total costs. For each level of output, calculate
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