Table 17-3 Imagine a Small Town in a Remote Area Where Only

question 457

Multiple Choice

Table 17-3
Imagine a small town in a remote area where only two residents, Maria and Miguel, own dairies that produce milk that is safe to drink. Each week Maria and Miguel work together to decide how many gallons of milk to produce. They bring milk to town and sell it at whatever price the market will bear. To keep things simple, suppose that Maria and Miguel can produce as much milk as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for milk is shown in the table below:
-Refer to Table 17-3. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a monopoly. What will be the price of milk once Maria and Miguel reach a Nash equilibrium?

• A)$14
• B)$12
• C)$10
• D)$8

Analyze the impact and value of advertisement strategies in market efficiency.

Differentiate among various market structures based on the number of firms, product differentiation, and barriers to entry.

Recognize the characteristics and outcomes of monopolistically competitive markets.

Determine the conditions for profit maximization in different market structures.

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