Suppose That Grinch and Grubb Go into the Wine Business

question 20

Multiple Choice

suppose that Grinch and Grubb go into the wine business in a small country where wine is difficult to grow.The demand for wine is given by p = $480 - .2Q, where p is the price and Q is the total quantity sold.The industry consists of just the two Cournot duopolists, Grinch and Grubb.Imports are prohibited.Grinch has constant marginal costs of $6 and Grubb has marginal costs of $45.How much Grinch's output in equilibrium?

• A)675
• B)1,350
• C)337.50
• D)1,012.50
• E)2,025

Explain the behaviors of marginal, average, and total products as inputs vary.

Identify the point where marginal product equals average product.

Understand the implications of the law of diminishing returns on productivity and output.

Understand the graphical representation and interpretation of production functions, including total product curves.

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Definitions:

Direct Labor

The wages paid to workers who are directly involved in the production of goods or the provision of services.

Units

Units typically refer to the individual items or quantities of a product or service produced or sold by a business.

Activity Variance

The difference between what was planned in terms of activity levels or costs and what was actually achieved.

Administrative Expenses

Costs related to the general operation of a business, such as salaries of executive personnel and office supplies.