Table 16-1
the Table Below Shows the Total Demand for Viewing

question 85

Multiple Choice

Table 16-1
The table below shows the total demand for viewing a rare penguin species at a local reserve.Ecotour companies have to build discreet viewing hides for tourists to view the penguins.Each ecotour company has to pay a fixed fee of $5000 for the right to build on the reserve.Assume that hides can be supplied to tourists at zero marginal cost.Tickets are sold to tourists to use the viewing hides. $\begin{array}{|c|c|}\hline \text { Quantity (Visits) } & \text { Price(\$ ticket) } \\\hline 0 & 48 \\\hline 2000 & 36 \\\hline 4000 & 24 \\\hline 6000 & 12 \\\hline 8000 & 8 \\\hline 10000 & 4 \\\hline 12000 & 0 \\\hline\end{array}$ $\begin{array}{|c|c|c|}\hline \text { Quantity (Visits) } & \text { Price(\$ ticket) } & \text { Revenue } \\\hline 0 & 12 & 0 \\\hline 1000 & 10 & 10 \mathrm{k} \\\hline 2000 & 8 & 16 \mathrm{k} \\\hline 3000 & 6 & 18 \mathrm{k} \\\hline 4000 & 4 & 16 \mathrm{k} \\\hline 5000 & 2 & 10 \mathrm{k} \\\hline 6000 & 0 & 0 \\\hline\end{array}$ Any firm can change tickets by steps of 500 only.Any 500 step of quantity is assumed to be sold at the midpoint of the two prices (eg.3500 tickets would be sold for $5)
-Refer to Table 16-1.Assuming that oligopolists do not have the opportunity to collude, once they have reached the Nash equilibrium, it:

• A)is always in their best interest to supply more to the market
• B)is always in their best interest to leave supply unchanged
• C)is always in their best interest to supply less to the market
• D)may be in their best interest to do any of the above, depending on market conditions

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Definitions:

Tying Contract

An agreement where the sale of one product (the tying product) is conditional on the purchase of another product (the tied product).

Clayton Act

A U.S. antitrust law enacted in 1914 aimed at promoting competition among businesses by prohibiting certain types of conduct that would lead to anti-competitive practices.

Herfindahl Index

A measure of market concentration, calculated by squaring each firm's market share and then summing these squares, used to assess competition.

Pre-Merger

The phase before the completion of a merger in which planning and negotiation occur.