MINDTAP Homework (Ch 17) d Due Today at 7 PM PST 3. Breakdown of a cartel agreem

Question

MINDTAP Homework (Ch 17) d Due Today at 7 PM PST 3. Breakdown of a cartel agreement Consider a town in which only two residents, Van and Amy, own wells that produce water safe for drinking. Van and Amy can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Quantity Demanded Total Revenue (Dollars per gallon) (Galions of water) (Dollars) 3.60 3.30 3.00 2.70 $99.00 $180.00 $243.00 288.00 315.00 5324.00 315.00 288.00 $243.00 $180.00 99.00 120 2.10 1,80 1.50 1.20 210 240 270 300 330 360 0.30

Explanation / Answer

Ans)

Profit maximizng price is 1.80
Total output is 180
Vans profit=162
Amys profit=162

Falls to
Vans profit=(1.5*120)=180
Amys profit=(1.5*90)=135

Vans profit=288/2=144
Amys profit=144
Total Profit=288

FALSE

Duopoly

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