Table 17-1 Imagine a Small Town in Which Only Two Residents,Abby and Residents,Abby

question 374

Multiple Choice

Table 17-1
Imagine a small town in which only two residents,Abby and Brad,own wells that produce safe drinking water.Each week Abby and Brad work together to decide how many gallons of water to pump.They bring water to town and sell it at whatever price the market will bear.To keep things simple,suppose that Abby and Brad can pump as much water as they want without cost so that the marginal cost is zero.The weekly town demand schedule and total revenue schedule for water is shown in the table below:

-Refer to Table 17-1.Suppose the town enacts new antitrust laws that prohibit Abby and Brad from operating as a monopoly.How much profit will Abby and Brad each earn once they reach a Nash equilibrium?

• A) $36
• B) $32
• C) $18
• D) $16

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Definitions:

Laptop Computers

Portable personal computers with the components, inputs, outputs, and capabilities of a desktop computer, designed for easy transport and use.

Note-Taking

The practice of recording information from various sources and contexts in a systematic way.

Binders

Tools or devices used for holding together pages or other materials for organization and protection.

Market for Paper

An economic marketplace involving the buying, selling, and trading of paper products, including raw materials for paper and finished products like books and magazines.