Suppose that there are only two firms in the petroleum market Saudi Aramco (SA) and Kuwait Petroleum Corporation (KPC)

Subject:MarketingPrice:2.88 Bought3

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Suppose that there are only two firms in the petroleum market Saudi Aramco (SA) and Kuwait Petroleum Corporation (KPC).

Demand equation: [Math Processing Error]P=110−Q

For each firm marginal cost [Math Processing Error]MC=$20

(Quantity of outcome [Math Processing Error](qSA), Price [Math Processing Error](pSA), Profit [Math Processing Error](πSA)), (Quantity of outcome [Math Processing Error](QKPC), Price [Math Processing Error](pKPC), Profit [Math Processing Error](πKPC))

[Math Processing Error]Q=qSA+qKPC

Suppose that the firms cooperate to act as a monopoly and want to form an OPEC cartel in the market, then:

a. What are the objectives of this cartel?

b. Calculate: Quantity of output, price, profit.