Table 17-30 Imagine a Small Town in Which Only Two Residents, Abby

question 329

Essay

Table 17-30
Imagine a small town in which only two residents, Abby and Brad, own wells that produce safe drinking water. Each week Abby and Brad work together to decide how many gallons of water to pump. They bring water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Abby and Brad can pump as much water as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below:
-Refer to Table 17-30. Discuss the difference between the monopoly outcome and the Nash equilibrium.

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Definitions:

Peer Pressure

The influence exerted by a peer group in encouraging a person to change their attitudes, values, or behaviors to conform to group norms.

Aggressive Modeling

The process by which individuals learn aggressive behavior by observing and imitating the aggressive actions of models, such as parents, characters on television, or peers.

Self-Reinforcement

The process of rewarding oneself to increase or maintain a behavior, based on personal standards and without external rewards.

The Id

A component of Freud's psychoanalytic theory representing primal desires and drives.