Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 6.00 5.50 45 247.50 5.00 90 450.00 4.50 135 607.50 4.00 180 720.00 3.50 225 787.50 3.00 270 810.00 2.50 315 787.50 2.00 360 720.00 1.50 405 607.50 1.00 450 450.00 0.50 495 247.50 540 Suppose Eric and Ginny form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output is gallons. As part of their cartel agreement, Eric and Ginny agree to split production equally. Therefore, Eric's profit is S |, and Ginny's profit is $ Suppose that Eric and Ginny have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Eric says to himself, "Ginny and I aren't the best of friends anyway. If I increase my production to 45 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow." ▼ to $ and Ginny's profit becomes $ After Eric implements his new plan, the price of water per gallon. Given Ginny and Eric's production levels, Eric's profit becomes s Because Eric has deviated from the cartel agreement and increased his output of water to 45 gallons more than the cartel amount, Ginny decides that she will also increase her production to 45 gallons more than the cartel amount. Ginny's profit becomes $ After Ginny increases her production, Eric's profit becomes $ of the profits of Eric and Ginny) is now S and total profit (the sum
Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 6.00 5.50 45 247.50 5.00 90 450.00 4.50 135 607.50 4.00 180 720.00 3.50 225 787.50 3.00 270 810.00 2.50 315 787.50 2.00 360 720.00 1.50 405 607.50 1.00 450 450.00 0.50 495 247.50 540 Suppose Eric and Ginny form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total output is gallons. As part of their cartel agreement, Eric and Ginny agree to split production equally. Therefore, Eric's profit is S |, and Ginny's profit is $ Suppose that Eric and Ginny have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly quantity. Then one night before going to sleep, Eric says to himself, "Ginny and I aren't the best of friends anyway. If I increase my production to 45 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow." ▼ to $ and Ginny's profit becomes $ After Eric implements his new plan, the price of water per gallon. Given Ginny and Eric's production levels, Eric's profit becomes s Because Eric has deviated from the cartel agreement and increased his output of water to 45 gallons more than the cartel amount, Ginny decides that she will also increase her production to 45 gallons more than the cartel amount. Ginny's profit becomes $ After Ginny increases her production, Eric's profit becomes $ of the profits of Eric and Ginny) is now S and total profit (the sum
Chapter15: Gross Domestic Product
Section: Chapter Questions
Problem 1SQ
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Question
Consider a town in which only two residents, Eric and Ginny, own wells that produce water safe for drinking. Eric and Ginny can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water.
Note: the second picture of the last blank has 4 option
A. nash equilibrium
B tying
c resale price maintenance
D predatory pricing
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