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

question 81

Multiple Choice

Table 17-1
Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Rochelle and Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The town's weekly 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 Rochelle and Alec from operating as a monopoly. How many gallons of water will be produced and sold once Rochelle and Alec reach a Nash equilibrium?

Definitions:

Bureaucracies

Organizational structures characterized by a hierarchy of authority, a clear division of labor, explicit rules, and impersonality.

Woodward's Studies

Research by Joan Woodward that established a link between technology and organizational structure, suggesting the optimal structure varies by technological type.

Continuous-Process Plants

Factories where production materials are moved continuously through a series of steps or processes.

Mass Production

The manufacturing of large quantities of standardized products, often using assembly line technology and methods, to achieve economies of scale.