4 Suppose that Brian and Crystal have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopolyquantity. Then one night before going to sleep, Brian says to himself, "Crystal and I aren't the best of friends anyway. If I increase my production to40 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow."After Brian implements his new plan, the price of waterto $per gallon. Given Crystal and Brian's production levels,Brian's profit becomes sand Crystal'ses sdecreasesBecause Brian has deviated from the cartel agreement a increasesI his output of water to 40 gallons more than the cartel amount, Crystal decidesthat she will also increase her production to 40 gallons hore uran une cartel amount.After Crystal increases her production, Brian's profit becomes $Crystal's profit becomes $and total profit (thesum of the profits of Brian and Crystal) is now STrue or False: Based on the fact that both Brian and Crystal increased production from the initial cartel quantity, you know that the output effect waslarger than the price effect at that quantity.O TrueO FalseNote that Brian and Crystal started by behaving cooperatively. However, once Brian decided to cheat, Crystal decided to cheat as well. In other words,Crystal's output decisions are based on Brian's actions.This behavior is an example of Consider a town in which only two residents, Brian and Crystal, own wells that produce water safe for drinking. Brian and Crystal can pump and sell asmuch water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water.PriceQuantity Demanded Total Revenue(Dollars per gallon)(Gallons of water)(Dollars)5.404.9540$198.004.5080$360.004.05120$486.003.60160$576.003.15200$630.002.70240$648.002.25280$630.001.80320$576.001.35360$486.000.90400$360.000.45440$198.00480Suppose Brian and Crystal form a cartel and behave as a monopolist. The profit-maximizing price is s|per gallon, and the total outputisgallons. As part of their cartel agreement, Brian and Crystal agree to split production equally. Therefore, Brian's profit isand Crystal's profit is s

Meaning of Monopoly: The term monopoly refers to the situation under which there is only an…

Consider a town in which only two residents, Brian and Crystal, own wells that produce water safe for drinking. Brian and Crystal 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. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 5.40 4.95 40 $198.00 4.50 80 $360.00 4.05 120 $486.00 3.60 160 $576.00 3.15 200 $630.00 2.70 240 $648.00 2.25 280 $630.00 1.80 320 $576.00 1.35 360 $486.00 0.90 400 $360.00 0.45 440 $198.00 480 Suppose Brian and Crystal form a cartel and behave as a monopolist. The profit-maximizing price is s per gallon, and the total output is gallons. As part of their cartel agreement, Brian and Crystal agree to split production equally. Therefore, Brian's profit is and Crystal's profit is s

Consider a town in which only two residents, Brian and Crystal, own wells that produce water safe for drinking. Brian and Crystal 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. Price Quantity Demanded Total Revenue (Dollars per gallon) (Gallons of water) (Dollars) 5.40 4.95 40 $198.00 4.50 80 $360.00 4.05 120 $486.00 3.60 160 $576.00 3.15 200 $630.00 2.70 240 $648.00 2.25 280 $630.00 1.80 320 $576.00 1.35 360 $486.00 0.90 400 $360.00 0.45 440 $198.00 480 Suppose Brian and Crystal form a cartel and behave as a monopolist. The profit-maximizing price is s per gallon, and the total output is gallons. As part of their cartel agreement, Brian and Crystal agree to split production equally. Therefore, Brian's profit is and Crystal's profit is s

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose that Brian and Crystal 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, Brian says to himself, "Crystal and I aren't the best of friends anyway. If I increase my production to
40 gallons more than the cartel amount, I can increase my profit even though her profit goes down. I will do that starting tomorrow."
After Brian implements his new plan, the price of water
to $
per gallon. Given Crystal and Brian's production levels,
Brian's profit becomes s
and Crystal's
es s
decreases
Because Brian has deviated from the cartel agreement a increases
I his output of water to 40 gallons more than the cartel amount, Crystal decides
that she will also increase her production to 40 gallons hore uran une cartel amount.
After Crystal increases her production, Brian's profit becomes $
Crystal's profit becomes $
and total profit (the
sum of the profits of Brian and Crystal) is now S
True or False: Based on the fact that both Brian and Crystal increased production from the initial cartel quantity, you know that the output effect was
larger than the price effect at that quantity.
O True
O False
Note that Brian and Crystal started by behaving cooperatively. However, once Brian decided to cheat, Crystal decided to cheat as well. In other words,
Crystal's output decisions are based on Brian's actions.
This behavior is an example of

Consider a town in which only two residents, Brian and Crystal, own wells that produce water safe for drinking. Brian and Crystal 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.
Price
Quantity Demanded Total Revenue
(Dollars per gallon)
(Gallons of water)
(Dollars)
5.40
4.95
40
$198.00
4.50
80
$360.00
4.05
120
$486.00
3.60
160
$576.00
3.15
200
$630.00
2.70
240
$648.00
2.25
280
$630.00
1.80
320
$576.00
1.35
360
$486.00
0.90
400
$360.00
0.45
440
$198.00
480
Suppose Brian and Crystal form a cartel and behave as a monopolist. The profit-maximizing price is s
|per gallon, and the total output
is
gallons. As part of their cartel agreement, Brian and Crystal agree to split production equally. Therefore, Brian's profit is
and Crystal's profit is s

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