Refer to Table 17-1. If Rochelle and Alec operate as a profit-maximizing monopoly in the market for water, how many gallons of water will be produced and sold?
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To find the profit-maximizing quantity, we need to find the quantity where marginal revenue (MR) equals marginal cost (MC). Unfortunately, the table doesn't directly provide marginal cost. However, we can infer some information. Show more…
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Consider a town in which only two residents, Khalid and Sabrina, own wells that produce water safe for drinking. Khalid and Sabrina 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. Price (Dollars per gallon) Quantity Demanded (Gallons of water) Total Revenue (Dollars) 5.40 0 0 4.95 45 $222.75 4.50 90 $405.00 4.05 135 $546.75 3.60 180 $648.00 3.15 225 $708.75 2.70 270 $729.00 2.25 315 $708.75 1.80 360 $648.00 1.35 405 $546.75 0.90 450 $405.00 0.45 495 $222.75 0 540 0 Suppose Khalid and Sabrina form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output is gallons. As part of their cartel agreement, Khalid and Sabrina agree to split production equally. Therefore, Khalid's profit is $ , and Sabrina's profit is $ .
Anjali K.
Can I get an explanation for this question,please
Crystal W.
Consider a town in which only two residents, Amrit and Aideen, own wells that produce water safe for drinking. Amrit and Aideen 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. Price (Dollars per gallon) Quantity Demanded (Gallons of water) Total Revenue (Dollars) 4.80 0 0 4.40 35 $154.00 4.00 70 $280.00 3.60 105 $378.00 3.20 140 $448.00 2.80 175 $490.00 2.40 210 $504.00 2.00 245 $490.00 1.60 280 $448.00 1.20 315 $378.00 0.80 350 $280.00 0.40 385 $154.00 0 420 0 Suppose Amrit and Aideen form a cartel and behave as a monopolist. The profit-maximizing price is $2.40 per gallon, and the total output is 210 gallons. As part of their cartel agreement, Amrit and Aideen agree to split production equally. Therefore, Amrit's profit is $ , and Aideen's profit is $ . Suppose that Amrit and Aideen have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Amrit says to himself, "Aideen and I aren't the best of friends anyway. If I increase my production to 35 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow." After Amrit implements his new plan, the price of water to $ per gallon. Given Aideen and Amrit's production levels, Amrit's profit becomes $ and Aideen's profit becomes $ . Because Amrit has deviated from the cartel agreement and increased his output of water to 35 gallons more than the cartel amount, Aideen decides that she will also increase her production to 35 gallons more than the cartel amount.
Akash M.
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