Consider a town in which only two residents, Gilberto and Juanita, own wells that produce water safe for drinking. Gilberto and Juanita 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) 4.80 4.40 45 $198.00 4.00 90 $360.00 3.60 135 $486.00 3.20 180 $576.00 2.80 225 $630.00 2.40 270 $648.00 2.00 315 $630.00 1.60 360 $576.00 1.20 405 $486.00 0.80 450 $360.00 0.40 495 $198.00 540 Suppose Gilberto and Juanita form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total putput is gallons. As part of their cartel agreement, Gilberto and Juanita agree to split production equally. Therefore, Gilberto's profit is and Juanita's profit is $
Consider a town in which only two residents, Gilberto and Juanita, own wells that produce water safe for drinking. Gilberto and Juanita 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) 4.80 4.40 45 $198.00 4.00 90 $360.00 3.60 135 $486.00 3.20 180 $576.00 2.80 225 $630.00 2.40 270 $648.00 2.00 315 $630.00 1.60 360 $576.00 1.20 405 $486.00 0.80 450 $360.00 0.40 495 $198.00 540 Suppose Gilberto and Juanita form a cartel and behave as a monopolist. The profit-maximizing price is $ per gallon, and the total putput is gallons. As part of their cartel agreement, Gilberto and Juanita agree to split production equally. Therefore, Gilberto's profit is and Juanita's profit is $
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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