​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:

Scientific Data

Information collected through systematic observation or experimentation, used to validate or refute hypotheses.

Elaboration Likelihood Model

The idea that an individual’s thoughts about a persuasive message (rather than the message itself) determine whether attitude change will occur.

Peripheral Route

A method of persuasion that relies on superficial cues or associations, such as attractiveness or celebrity endorsement, rather than logical arguments.

Controversial

Causing disagreement or discussion, often because of differing opinions on a sensitive or decisive issue.