1) ANALYSIS Problem: - Members of cartel lost cooperation.

Background & Solution:Initially the countries that produce oil formed a group/cartel named OPEC (Organization of Petroleum Exporting Countries) where in the countries like Iran, Iraq, Kuwait, Saudi, Arabia, and Venezuela, Qatar, Indonesia, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, and Gabon became members by 1973 and they became worlds oil reserves. Now OPEC tried to raise the oil price by decreasing the quantity produced so that they could have a control on member countries production. The members were in favour of the cartels policy during the period of 1973 to 1985, where they rose the price of barrel from $3 to $11 till 1974 and then to $35 in 1985 but they cheated on agreements as member countries wanted to increase the production so that they could earn large profit share. This created incorporation in the cartel/group and OPEC was unable to control which resulted in declining of price to $13 a barrel in 1986. The prices of oil were rose in 2005 due to increase in demand and supply was also there as per needs. But as soon as the price of crude oil adjusted for overall inflation, its price never rose till the level of price that was in 1981 which would have been equivalent to $90 a barrel in todays market. The consumers were benefited with this incorporation among cartel members as the price of crude oil was reduced. Recommendation:If there was collusion then OPEC can have same profit share or monopoly as they would agree on monopoly profits but it is often not possible because antitrust laws prohibit open agreements among oligopolists as a matter of public policy.

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ANALYSIS Problem: - Rise in airlines fares was a conspiracy against public. Background:Here Robert Crandall, the president of American Airlines was interested in making more profit so he contacted Howard Putnam, the president of Braniff Airways and asked him to hike the fares by 20% so that Crandall could hike his airlines fares by same or more and make profit. As Putnam was aware of legal regulations he said Crandall that they were not supposed to talk about the prices but Crandall ignored it. Putnam being a good businessman who follows legal rules and regulations he submitted a tape of conversation to the Department of Justice. Solution: The Department of Justice filed a suit against Crandall as per The Sherman Antitrust Act, which prohibits the executives even from talking about fixing prices. Later after 2 years Crandall agreed to restrictions on his business activities put forward by the Department of Justice. The department did this to protect competition in industry and reduce attempts of monopolizing. Recommendation:According to one of the ten principles of economics Governments can sometimes improve market outcomes they can move the allocation of resources closer to optimum and policymakers should try to induce firms in an oligopoly to compete rather than to cooperate.

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ANALYSIS Problem: - If a situation like prisoners dilemma occurs what strategy one will adopt.

Background:Prisoners' dilemma is quite a complicated game. The prisoners' dilemma describes many of life's situations and it shows that cooperation can be difficult to maintain, even when co-operation would make both player in the game better off. In this game players must penalize each other for not co-operating to encourage co-operation. In a game repeated many times, players can return to the co-operative outcome after a period of non-co-operation. Political scientist Robert Axelrod held a tournament to see which strategy work best. Solution:The winner used a simple strategy called "tit for tat" other than computer programs. This strategy start out friendly penalizes unfriendly player & forgives them if warranted. This strategy did better than all other complicated strategy. The prisoners' dilemma tournament suggests that this may be a good rule of thumb for playing some of the games of life.

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ANALYSIS Problem: -Whether Microsoft should be allowed to integrate its browser into its operating system against antitrust claims. Background:The U.S. government filed suit against the Microsoft Corporation in 1988. The main issue was that whether Microsoft should be allowed to integrate its browser into its operating system. Government claimed that the company was bundling these two products to expand the market power into an unrelated market and other this would discourage other software companies to come in market by new product. Microsoft responded this by claiming that they add new feature into old product for betterment and consumers can be confident by their about their work. Government also said that Microsoft had substantial monopoly power and they are trying to expand it but Microsoft said that software marketsare always changing and constantly being challenged by other company such as Apple Mac and Linux. Solution:After a long trail in 2000 the judge ordered that Microsoft should be divide into 2 companies-one that sold operating system and other that sold applications software. But within a year this decision overturned and finally in 2002 both Microsoft accepted some business restriction and government accepted that browser would remain a part of Windows.

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ANALYSIS GDP means the market value of all final goods and services produced within a country in a given period of time. Here the table shows the components related to calculate the GDP of a country. GDP can be calculated as follows: Y= C+I+G+NX In U.S 70% of GDP is made by consumption(C), 16% by investments(I), 19% by government purchases(G) and 5% by net exports(NX) but NX is negative because Americans earned less from selling to foreigners than they spent on foreign goods. This constitutes to U.S. GDP and the contribution of per person in GDP is also mentioned in the table.

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ANALYSIS In this case the chart given explains that during the period from 1965 to 2005 the GDP growth rate has been increasing and declining over a period of time. Though it is declining over a period of time overall real GDP has shown continuous growth. The overall of standard of living of people is also increased due to increase in real GDP although GDP growth is not steady The reasons for declining real GDP that is recession can also be due to increasing unemployment, increasing bankruptcies and falling profit.

3)

ANALYSIS Above given data published in human development report 2004 by United Nations. These data proves that the GDP of different countries differ their standard of living accordingly. The countries like US. Germany, Japan, Mexico having higher GDP has higher life expectancy, higher rate of adult literacy, and higher rate of internet usage. Life expectancy, adult literacy and internet usage are the major indicators of GDP. The higher this rate higher is the GDP of that country. The GDP per person is much higher in developed countries than GDP per person in developing countries. The higher GDP is itself the reason for which these countries are called developed countries. On the other hands developing countries like India, Pakistan, Bangladesh, and Nigeria have very lower GDP compare to developed countries and it is very clear from the table given above having all determinants of GDP i.e. life expectancy, adult literacy, Internet usage. The reasons for lower rate of GDP and lower rate of other components can be unutilised natural and human resources, ineffective communication channels, fewer schools and educational advancement, higher rates of malnutrition, higher rates of maternal mortality, lower medical and health services, higher population. All these reasons decrease the standard of living of people which ultimately results into lower GDP. If these countries start utilising its resources in effective manner and try to control

its population then it is possible to increase the standard of living of people and to increase the GDP

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ANALYSIS Problem: - Why countries with more population dont get success in games like Olympics. Background:This case based on Olympic game which is held every four year. In this game commentators use the number of medals a nation takes home as a measure of success which is different from GDP. GDP was called the best single measure of the economic well-being of a society. Economists Andrew Berand and Meghan Busse examined the determinants of Olympic success in the Review of Economics and Statistics in 2004 they found that despite few country have large populations they win only 6 percent of the medals because of their poverty like China, India, Indonesia and Bangladesh together have more than 40 percent of the worlds population but they account for only 5 percent of the worlds GDP. Solution:Berand and Busse found that the best gauge of a nations ability to produce world class athletes is total GDP. India has many people and low GDP per person and the Netherlands have few people and high GDP per person but both of them has same total GDP so they can be expected to win same number of medals. In addition the former communist countries of eastern Europe (the soviet union, Romania, east Germany and so on) earned more medals than other countries with similar GDP. Recommendation:If the country tries to increase its GDP by utilising its resources as improving the factors which help to increase GDP and quality of life then that country will get more athletes and can earn more medals in Olympics.