​Table 17-36 the Information in the Table Shows the Total Demand for Demand

question 420

Multiple Choice

​Table 17-36
The information in the table shows the total demand for water service in Takoma. Assume that there are two companies operating in Takoma. Each company that provides these services incurs an annual fixed cost of $400 and that the marginal cost of providing the service to each customer is exactly $2.00. Figures listed are for an annual service contract.
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-​Refer to Table 17-36. The two water service providers in Takoma are able to form a successful cartel. If they collude on the quantity of service contracts each sells and split the market equally,

• A)​each firm will charge a price of $15 and each firm will sell 450 service contracts.
• B)​each firm will charge a price of $20 and each firm will sell 400 service contracts.
• C)​each firm will charge a price of $25 and each firm will sell 350 service contracts.
• D)​each firm will charge a price of $30 and each firm will sell 300 service contracts.

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Definitions:

Market Segments

The process of dividing a broad target market into smaller, more homogeneous groups of customers with similar needs, characteristics, or behaviors.

Consumer Price Points

Predetermined prices at which customers are willing to buy a product or service.

Inter-consumer Communication

The exchange of information, perceptions, and opinions between customers, often influencing purchasing decisions and brand perceptions.

Innovative New Products

Refers to products that introduce unique features, benefits, or technological advancements, distinguishing them from existing offerings in the market.