Suppose Duopolists in the Market for Spring Water Share a Market

question 26

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.Optimal output for Cournot duopolists moving simultaneously is:

• A) 0 gallons of water per day per firm.
• B) 625 gallons of water per day per firm.
• C) 833 gallons of water per day per firm.
• D) 1,250 gallons of water per day per firm.
• E) 2,500 gallons of water per day per firm.

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Definitions:

Pizza Makers

Individuals or machines that specialize in preparing and baking pizzas.

Pizza Sauce

While not a standard economic key term, it could be studied in terms of its production, cost, and role in the food industry.

Decrease in Price

A reduction in the cost at which goods or services are sold, leading to a potential increase in quantity demanded.

Quantity Supplied

The amount of a good or service that producers are willing to sell at a given price over a specific period.