Suppose Duopolists in the Market for Spring Water Share a Market

question 9

Multiple Choice

Suppose duopolists in the market for spring water share a market demand curve given by P = 50 - 0.02Q,where P is the price per gallon and Q is thousands of gallons of water per day.The marginal cost of producing water is near zero for both firms.If firm A produces zero,firm B's best response is producing:

• A) 0 gallons of water per day.
• B) 48 gallons of water per day.
• C) 833 gallons of water per day.
• D) 1,250 gallons of water per day.
• E) 2,500 gallons of water per day.

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