Table 16-3 Imagine a Small Town in Which Only Two Residents, Robert

question 106

Multiple Choice

Table 16-3
Imagine a small town in which only two residents, Robert and John, own wells that produce water for safe drinking. Each Saturday, Robert and John work together to decide how many litres of water to pump, bring the water to town, and sell it at whatever price the market will bear. To keep things simple, suppose that Robert and John can pump as much water as they want without cost; therefore, the marginal cost of water equals zero.
The weekly town demand schedule and total revenue schedule for water are shown in the table.

-Refer to Table 16-3. If the market for water was perfectly competitive instead of monopolistic, how many litres of water would be produced and sold?

• A) 70
• B) 90
• C) 110
• D) 120

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Definitions:

Dual-Class Shares

A corporate structure with two or more classes of stock, each with differing voting rights, dividends, or other attributes.

Common Shares

Equity securities that represent ownership in a corporation, providing voting rights and a share in the company’s profits through dividends.

Founders

Individuals who establish a company or an organization, often involved in its early development and management.

Required Rate

The minimum return rate expected by investors or lenders on their investment or loan.