Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure 2. Cournot competitionConsider a town in which only two residents, Andrew and Beth, own wells that produce water safe for drinking. Andrew and Beth can pump and sell asmuch water as they want at no cost. Assume that outside water cannot be transported into the town for sale. The following questions will walk youthrough how to compute the Cournot quantity competition outcome for these duopolists.Consider the market demand curve for water and the marginal cost for collecting water on the following graph. Assume Andrew believes that Bethis going to collect 4 gallons of water to sell.On the graph, use the purple points (diamond symbols) to plot the demand curve (D₁) Andrew faces given Beth's water collection; then use the greypoints (star symbol) to plot the marginal revenue curve (MR₁) Andrew faces. Finally, use the black point (plus symbol) to indicate the profit-maximizing price and quantity (Profit Max 1) in this case.Note: Dashed drop lines will automatically extend to both axes.PRICE (Dollars per gallon)6.005.50 +5.004.50 +4.003.503.002.50 +2.001.501.000.50 +00Market DemandMC1+23 4 5 6 7 89QUANTITY (Gallons of water)101112$5$D₁MR₁Profit Max 1?

Cournot competition describes how firms in an industry compete by choosing the quantity of output…

On the graph, use the purple points (diamond symbols) to plot the demand curve (D₁) Andrew faces given Beth's water collection; then use the grey points (star symbol) to plot the marginal revenue curve (MR₁) Andrew faces. Finally, use the black point (plus symbol) to indicate the profit- maximizing price and quantity (Profit Max 1) in this case.

On the graph, use the purple points (diamond symbols) to plot the demand curve (D₁) Andrew faces given Beth's water collection; then use the grey points (star symbol) to plot the marginal revenue curve (MR₁) Andrew faces. Finally, use the black point (plus symbol) to indicate the profit- maximizing price and quantity (Profit Max 1) in this case.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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