(Table: Gascolator Producers I) Banner and Sense Are Bertrand Competitors

question 112

Multiple Choice

(Table: Gascolator Producers I) Banner and Sense are Bertrand competitors producing identical gascolators (a main line strainer) . The inverse market demand curve for gascolators is P = 2,000 - 4Q, where Q is the quantity of gascolators and P is the price per gascolator. Banner and Sense produce gascolators at a constant marginal cost of $80. If Banner charges a price of $100 and Sense charges $101, Sense's quantity sold is ____.

• A) 240
• B) 120
• C) 100
• D) 0

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Definitions:

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, indicating gains from trade.

Importing Country

A nation that buys goods and services from foreign countries to fulfill its domestic demands, which can affect its trade balance and economic health.

World Price

The worldwide market value of a product or service, established by the universal demand and supply.