The Inverse Demand Function for Grapefruit Is Defined by the Equation

question 17

Multiple Choice

The inverse demand function for grapefruit is defined by the equation p = 145 - 6q, where q is the number of units sold.The inverse supply function is defined by p = 5 + 4q.A tax of $20 is imposed on suppliers for each unit of grapefruit that they sell.When the tax is imposed, the quantity of grapefruit sold falls to

• A)9
• B)10
• C)14
• D)12
• E)13.

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Definitions:

Pricing Strategy

The approach a company uses to determine the best price for its products or services to maximize profits and meet customer expectations.

Tacit Collusion

Coordination between competing firms that occurs without direct communication, often through price signaling or market strategies, avoiding explicit agreements.

Cartel

An association of independent businesses or countries that agree to coordinate production, pricing, and marketing of a product to monopolize a market or maximize profits.

Dominant-Strategy Equilibrium

A situation in game theory where one strategy is better than others, regardless of what any other player chooses.