Table 17-6 Imagine a Small Town in Which Only Two Residents, Kunal

question 221

Multiple Choice

Table 17-6
Imagine a small town in which only two residents, Kunal and Naj, own wells that produce safe drinking water. Each week Kunal and Naj work together to decide how many gallons of water to pump, to bring the water to town, and to sell it at whatever price the market will bear. Assume Kunal and Naj 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 are shown in the table below.
-Refer to Table 17-6. If the market for water were perfectly competitive instead of monopolistic, how many gallons of water would be produced and sold?

• A)25
• B)100
• C)200
• D)300

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Definitions:

Initial Cost

Refers to the initial expenditure or investment required to start a project, acquire an asset, or launch a business operation.

Initial Cash Flow

The amount of money spent or received at the start of a project or investment, often used to calculate net present value.

Repairs

Actions taken to restore something damaged or deteriorated to a good or sound condition.

Property Taxes

Taxes levied by local governments on real estate based on the value of the property.