Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Rochelle and Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: Quantity (in gallons) Price Total Revenue (and Total Profit) 0 $60 $0 100 55 5,500 200 50 10,000 300 45 13,500 400 40 16,000 500 35 17,500 600 30 18,000 700 25 17,500 800 20 16,000 900 15 13,500 1,000 10 10,000 1,100 5 5,500 1,200 0 0 Refer to Table 17-1. If this market for water were perfectly competitive instead of monopolistic, what price would be charged? Group of answer choices $0 $30 $40 $60
Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Rochelle and Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: Quantity (in gallons) Price Total Revenue (and Total Profit) 0 $60 $0 100 55 5,500 200 50 10,000 300 45 13,500 400 40 16,000 500 35 17,500 600 30 18,000 700 25 17,500 800 20 16,000 900 15 13,500 1,000 10 10,000 1,100 5 5,500 1,200 0 0 Refer to Table 17-1. If this market for water were perfectly competitive instead of monopolistic, what price would be charged? Group of answer choices $0 $30 $40 $60
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Table 17-1
Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whateverprice the market will bear. To keep things simple, suppose that Rochelle and Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below:
Refer to Table 17-1. If this market for water wereperfectly competitive instead of monopolistic, what price would be charged?
Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever
|
Quantity
(in gallons) |
Price
|
Total Revenue
(and Total Profit) |
|
0
|
$60
|
$0
|
|
100
|
55
|
5,500
|
|
200
|
50
|
10,000
|
|
300
|
45
|
13,500
|
|
400
|
40
|
16,000
|
|
500
|
35
|
17,500
|
|
600
|
30
|
18,000
|
|
700
|
25
|
17,500
|
|
800
|
20
|
16,000
|
|
900
|
15
|
13,500
|
|
1,000
|
10
|
10,000
|
|
1,100
|
5
|
5,500
|
|
1,200
|
0
|
0
|
Refer to Table 17-1. If this market for water were
Group of answer choices
$0
$30
$40
$60
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Transcribed Image Text:Imagine a small town in which only two residents, Rochelle and Alec, own wells that produce safe drinking water. Each week Rochelle and Alec work together to decide
how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Rochelle and
Alec can pump as much water as they want without cost so that the marginal cost of water equals zero. The town's weekly demand schedule and total revenue schedule
for water is shown in the following table:
Quantity
(Gallons)
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
Table 17-1
Price
Refer to Table 17-1. What is the socially efficient quantity of water?
Ca. 600 gallons
Ob. 900 gallons
Oc. 1,200 gallons
Od. 0 gallons
(Dollars per
gallon)
60
55
50
45
40
35
30
25
20
15
10
5
0
Total Revenue and Total
Profit
(Dollars)
0
5,500
10,000
13,500
16,000
17,500
18,000
17,500
16,000
13,500
10,000
5,500
0
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