Scenario 12.1: Suppose Mountain Spring Water Can Be Produced at No Cost

question 94

Multiple Choice

Scenario 12.1:
Suppose mountain spring water can be produced at no cost and that the demand and marginal revenue curves for mountain spring water are given as follows:
Q = 6000 - 5P MR = 1200 - 0.4Q
-Refer to Scenario 12.1. What will be the price in the long run if the industry is a Cournot duopoly?

• A) $400
• B) $600
• C) $800
• D) $900
• E) Competition will drive the price to zero.

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Definitions:

Normal Standards

Performance benchmarks or criteria that are established based on average or anticipated conditions for the purpose of budgeting and cost control.

Labour Efficiency Variance

A measure that calculates the difference between the expected labor hours to produce an output and the actual hours used.

Poor Quality Materials

Materials that do not meet the required standards or specifications, potentially leading to failures in production or the final product.

Production Manager

A professional responsible for overseeing the production process, ensuring efficiency, meeting production targets, and maintaining quality standards.