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

question 106

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. Assume there are two profit-maximizing water service providers in this market who had formed a successful cartel. Now assume that the cartel breaks down, so that they are not able to collude on the price and quantity of service contracts to sell. How much profit will each firm earn when this market reaches a Nash equilibrium?

• A)​$6500.
• B)​$8800.
• C)​$6800.
• D)​$8000.

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Definitions:

Fertilizer

A chemical or natural substance added to soil or land to increase its fertility and promote plant growth.

Cropland

Land that is used for or suitable for the cultivation of crops for agriculture.

One-Child Policy

A population control policy formerly implemented by China, wherein families were restricted to having only one child to curb population growth.