Considerthe global market for crude oil, consisting of Saudi

Considerthe global market for crude oil, consisting of Saudi Arabia, Iran, and the restof the world.  Suppose that price-takingconsumers in the rest of the world have demand for crude oil given by:.P = 2500 – 1.5Q  Assume that price-taking fringesuppliers of crude oil in the rest of the world have marginal costs given by:.p = 2000+0.4Q  Suppose that Saudi Arabia hasmarginal costs given by:,p = 50+0.1QAnd that Iran has marginal costs givenby:.p = 100+0.2Q  Assume that neither Iran norSaudi Arabia has demand of their ownSupposethat Saudi Arabia and Iran are contemplating forming a Cournot duopolycartel.  (Hint: assume residual demandreflects case 3).a. What is the optimal amount of crude oilthat Saudi Arabia, Iran, and the rest of the world produces?b. What is the equilibrium price of crudeoil in the market?c. What is the mark-up charged by SaudiArabia and Iran?d. What are the profits to Saudi Arabia andIran?  e. What is the share of Saudi Arabia’sproduction to total duopoly production?f. How does the Cournot mark-ups compare tothe full enforcement (multi-plant monopoly consisting of Saudi Arabia and Iran)mark-ups?Now suppose instead that rest of worldfringe supply is given by: .  Supposethat Saudi Arabia and Iran are again contemplating forming a Cournot duopolycartel.  (Hint: assume residual demandreflects case 1).g. What is the optimal amount of crude oilthat Saudi Arabia, Iran, and the rest of the world produces?h. What is the equilibrium price of crudeoil in the market?i. What is the mark-up charged by SaudiArabia and Iran?j. What are the profits to Saudi Arabia andIran?  k. What is the share of Saudi Arabia’sproduction to total duopoly production?l. How does the Cournot mark-ups compare tothe full enforcement (multi-plant monopoly consisting of Saudi Arabia and Iran)mark-ups?Compare your results for these two cases.  What insights might this question have forthe OPEC strategy game