Imagine a small town in a remote area where only two residents, Maria and Miguel, own dairies that produce milk that is safe to drink. Each week Maria and Miguel work together to decide how many gallons of milk to produce. They bring milk to town and sell it at whatever price the market will bear. To keep things simple, suppose that Maria and Miguel can produce as much milk as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for milk is shown in the table below: b. $12 c. $10 Quantity (in gallons) 10 d. S8 1 2 3 14 15 16 17 8 9 10 11 12 Price $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Total Revenue Kand Total Profit) $0 $22 $40 $54 $64 Refer to Table 17-3. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a monopoly. What will be the price of milk once Maria and Miguel reach a Nash quilibrium? a. $14 $70 $72 $70 $64 $54 $40 $22 $0

Imagine a small town in a remote area where only two residents, Maria and Miguel, own dairies that produce milk that is safe to drink. Each week Maria and Miguel work together to decide how many gallons of milk to produce. They bring milk to town and sell it at whatever price the market will bear. To keep things simple, suppose that Maria and Miguel can produce as much milk as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for milk is shown in the table below: b. $12 c. $10 Quantity (in gallons) 10 d. S8 1 2 3 14 15 16 17 8 9 10 11 12 Price $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Total Revenue Kand Total Profit) $0 $22 $40 $54 $64 Refer to Table 17-3. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a monopoly. What will be the price of milk once Maria and Miguel reach a Nash quilibrium? a. $14 $70 $72 $70 $64 $54 $40 $22 $0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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