Table 17-1 Imagine a Small Town in Which Only Two Residents,Lisa and Residents,Lisa

question 153

Multiple Choice

Table 17-1
Imagine a small town in which only two residents,Lisa and Mark,own wells that produce safe drinking water.Each week Lisa and Mark work together to decide how many gallons of water to pump.They bring the water to town and sell it at whatever price the market will bear.To keep things simple,suppose that Lisa and Mark can pump as much water as they want without cost so that the marginal cost of water equals zero.The weekly town demand schedule and total revenue schedule for water is shown in the table below:

-Refer to Table 17-1.If Lisa and Mark operate as a profit-maximizing monopoly in the market for water,how much profit will each of them earn?

• A) $0
• B) $18,000
• C) $32,000
• D) $36,000

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Definitions:

Efficient Level

An optimal state of allocation of resources where any changes might lead to a decrease in efficiency or utility.

Upward Sloping

Describes a line or curve on a graph that moves higher as it goes from left to right, indicating a positive relationship between two variables.

Equilibrium Price

The market price at which the quantity of goods supplied equals the quantity of goods demanded.

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