Suppose Duopolists in the Market for Spring Water Share a Market

question 14

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 one firm acts as a first mover,the second firm will produce:

• A) 0 gallons of water per day per firm.
• B) 625 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.

---

Definitions:

Coefficient of Correlation

A mathematical tool that quantifies the robustness and bearing of a linear association between two entities.

Variation

The degree to which values in a dataset vary from one another and from the dataset’s average.

Population Correlation

A measure of the strength and direction of a linear relationship between two quantitative variables across the entire population.

Coefficient

A numerical or constant quantity placed before and multiplying the variable in an algebraic term.