Consider a town in which only two residents, Jacques and Kyoko, own wells that produce water safe for drinking. Jacques and Kyoko 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 (Dollars per gallon) 3.00 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 0.75 quantity Th 0.50 0.25 0 Quantity Demanded (Gallons of water) 0 50 100 150 200 I 250 300 350 400 450 500 550 600 Suppose Jacques and Kyoko form a cartel and behave as a monopolist. The profit-maximizing price is $ output is $ Total Revenue (Dollars) 0 $137.50 $250.00 $337.50 $400.00 $437.50 $450.00 $437.50 $400.00 $337.50 $250.00 $137.50 0 per gallon, and the total gallons. As part of their cartel agreement, Jacques and Kyoko agree to split production equally. Therefore, Jacques's profit is and Kyoko's profit is $ Suppose that Jacques and Kyoko have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly Jacque himself "Kyoko
Consider a town in which only two residents, Jacques and Kyoko, own wells that produce water safe for drinking. Jacques and Kyoko 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 (Dollars per gallon) 3.00 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 0.75 quantity Th 0.50 0.25 0 Quantity Demanded (Gallons of water) 0 50 100 150 200 I 250 300 350 400 450 500 550 600 Suppose Jacques and Kyoko form a cartel and behave as a monopolist. The profit-maximizing price is $ output is $ Total Revenue (Dollars) 0 $137.50 $250.00 $337.50 $400.00 $437.50 $450.00 $437.50 $400.00 $337.50 $250.00 $137.50 0 per gallon, and the total gallons. As part of their cartel agreement, Jacques and Kyoko agree to split production equally. Therefore, Jacques's profit is and Kyoko's profit is $ Suppose that Jacques and Kyoko have been successfully operating as a cartel. They each charge the monopoly price and sell half of the monopoly Jacque himself "Kyoko
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter15: Monopoly
Section: Chapter Questions
Problem 7PA
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3. Breakdown of a cartel agreementConsider a town in which only two residents, Jacques and Kyoko, own wells that produce water safe for drinking. Jacques and Kyoko 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.
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