Assume That Demand for a Product That Is Produced at Zero

question 7

Essay

Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
$$\begin{array} { | l | l | } \hline \text { Quantity } & \text { Price } \\\hline 0 & \$ 36 \\\hline 200 & \$ 33 \\\hline 400 & \$ 30 \\\hline 600 & \$ 27 \\\hline 800 & \$ 24 \\\hline 1000 & \$ 21 \\\hline 1200 & \$ 18 \\\hline 1400 & \$ 15 \\\hline 1600 & \$ 12 \\\hline 1800 & \$ 9 \\\hline 2000 & \$ 6 \\\hline 2200 & \$ 3 \\\hline 2400 & \$ 0 \\\hline\end{array}$$
a.What is the profit-maximizing level of production for a group of oligopolistic firms that operate as a cartel?
b.Assume that this market is characterized by a duopoly in which collusive agreements are illegal.What market price and quantity will be associated with a Nash equilibrium?

---

Definitions:

Unintentional Facial Expressions

Spontaneous expressions that occur without the individual's conscious control, often revealing true emotions despite any attempts to mask them.

Extrasensory Perception

The claimed ability to obtain information about the environment or the future beyond the use of the known senses.

Unparsimonious

Describes explanations or theories that are more complex or include more assumptions than necessary to explain phenomena.

Falsifiable

A criterion of scientific theory that requires it to be capable of being proven false through observation or experiment.