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

question 87

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. What will be the price of water once Rochelle and Alec reach a Nash equilibrium?

• A)$15
• B)$20
• C)$25
• D)$30

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Definitions:

Value of Y

Typically refers to the numerical worth or significance assigned to the variable 'Y' in mathematical or statistical contexts.

Slope

The measure of the steepness or incline of a line, often representing the rate of change of a function.

Economic Growth

An increase in the capacity of an economy to produce goods and services, compared over a period of time.

Total Output

The total quantity of goods or services produced by a firm or economy in a given period.