Which of the following is correct? Imagine a small town in a remote area where only two residents, Maria and Miguel, owndairies that produce milk that is safe to drink. Each week Maria and Miguel worktogether to decide how many gallons of milk to produce. They bring milk to town andsell it at whatever price the market will bear. To keep things simple, suppose that Mariaand Miguel can produce as much milk as they want without cost so that the marginal costis zero. The weekly town demand schedule and total revenue schedule for milk is shownin the table below:Total RevenueQuantity(in gallons)Price(and Total Profit)$24$01$22$222$20$403$18$544$16$64$14$706$12$727$10$708$8$649$6$5410$4$4011$2$2212SO$0Refer to the table. Suppose the town enacts new antitrust laws that prohibit Maria andMiguel from operating as a monopoly. Which of the following is correct?Maria and Miguel each sell 3 gallons of milk at the price of $12 per gallon once theyreach a Nash equilibrium.Maria and Miguel each sell 4 gallons of milk at the price of $8 per gallon once theyreach a Nash equilibrium.Maria and Miguel sell 8 gallons of milk at the price of $0 per gallon once they reach aNash equilibrium.Maria and Miguel sell 6 gallons of milk at the price of $12 per gallon once they reacha Nash equilibrium.

When in a small town in a remote area where only two residents, Maria and Miguel , own dairies that…

Refer to the table. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a monopoly. Which of the following is correct? Maria and Miguel each sell 3 gallons of milk at the price of $12 per gallon once they reach a Nash equilibrium. Maria and Miguel each sell 4 gallons of milk at the price of $8 per gallon once they reach a Nash equilibrium. Maria and Miguel sell 8 gallons of milk at the price of $0 per gallon once they reach a Nash equilibrium. Maria and Miguel sell 6 gallons of milk at the price of $12 per gallon once they reach a Nash equilibrium.

Refer to the table. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a monopoly. Which of the following is correct? Maria and Miguel each sell 3 gallons of milk at the price of $12 per gallon once they reach a Nash equilibrium. Maria and Miguel each sell 4 gallons of milk at the price of $8 per gallon once they reach a Nash equilibrium. Maria and Miguel sell 8 gallons of milk at the price of $0 per gallon once they reach a Nash equilibrium. Maria and Miguel sell 6 gallons of milk at the price of $12 per gallon once they reach a Nash equilibrium.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 20P: May and Raj me the only two growers who provide organically grown corn to a local grocery store....

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Question

Which of the following is correct?

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:
Total Revenue
Quantity
(in gallons)
Price
(and Total Profit)
$24
$0
1
$22
$22
2
$20
$40
3
$18
$54
4
$16
$64
$14
$70
6
$12
$72
7
$10
$70
8
$8
$64
9
$6
$54
10
$4
$40
11
$2
$22
12
SO
$0
Refer to the table. Suppose the town enacts new antitrust laws that prohibit Maria and
Miguel from operating as a monopoly. Which of the following is correct?
Maria and Miguel each sell 3 gallons of milk at the price of $12 per gallon once they
reach a Nash equilibrium.
Maria and Miguel each sell 4 gallons of milk at the price of $8 per gallon once they
reach a Nash equilibrium.
Maria and Miguel sell 8 gallons of milk at the price of $0 per gallon once they reach a
Nash equilibrium.
Maria and Miguel sell 6 gallons of milk at the price of $12 per gallon once they reach
a Nash equilibrium.

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