Table 17-4
Only Two Firms, JKL and XYZ, Sell a Particular

question 82

Multiple Choice

Table 17-4
Only two firms, JKL and XYZ, sell a particular product. The following table shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost.
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$$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Price } \\\text { (Dollars per unit) }\end{array} & \begin{array} { c } \text { Quantity Demanded } \\\text { (Units) }\end{array} & \begin{array} { c } \text { Total Revenue } \\\text { (Dollars) }\end{array} \\\hline 28 & 0 & 0 \\\hline 26 & 5 & 130 \\\hline 24 & 10 & 240 \\\hline 22 & 15 & 330 \\\hline 20 & 20 & 400 \\\hline 18 & 25 & 450 \\\hline 16 & 30 & 480 \\\hline 14 & 35 & 490 \\\hline 12 & 40 & 480 \\\hline 10 & 45 & 450 \\\hline 8 & 50 & 400 \\\hline 6 & 55 & 330 \\\hline 4 & 60 & 240 \\\hline 2 & 65 & 130 \\\hline 0 & 70 & 0 \\\hline\end{array}$$ ​
-Refer to Table 17-4. How much less do each of these firms earn in the Nash equilibrium than if they jointly maximize profits?

• A)$40.00
• B)$10.00
• C)$140.00
• D)$20.00

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Definitions:

Units-Of-Output Method

A depreciation method where the expense is calculated based on the units produced by the asset.

Depreciation Expense

This is the allocation of the cost of a tangible asset over its useful life.

Revenue

Income generated from normal business operations, usually from the sale of goods and services to customers.

Lessor

An entity or individual that leases or rents out an asset to another party, known as the lessee.