Assume Waterland and Aquataste make a nonbinding, informal agreement that each will produce 250 gallons of water, charge $1.50 per gallon, and evenly split the profit of $750.If Aquataste sticks to the agreement, Waterland has an incentive to renege on the agreement by producing 350 gallons because Waterland’s profits would then increase from $375 to $______ . (Provide your answer to two decimal places.) The following table shows your neighorhood's demand for drinking water. Assume that only two firms (Waterland and Aquataste) produce and sellwater in this market. Each firm offers the same quality, no fixed costs are incurred in the production of water, and each firm's marginal cost is constantand equal to $0 because both companies can pump as much water as needed without cost. Because marginal cost is constant and equal to $0, totalrevenue is equal to total profit.Price (per gallon)Quantity (gallons)Total Revenue (TR)$0.251000$250.00$0.50900$450.00$0.75800$600.00$1.00700$700.00$1.25600$750.00$1.50500$750.00$1.75400$700.00$2.00300$600.00$2.25200$450.00$2.50100$250.00$2.75$0.00

Answered: The following table shows your…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Assume Waterland and Aquataste make a nonbinding, informal agreement that each will produce 250 gallons of water, charge $1.50 per gallon, and evenly split the profit of $750.

If Aquataste sticks to the agreement, Waterland has an incentive to renege on the agreement by producing 350 gallons because Waterland’s profits would then increase from $375 to $______ . (Provide your answer to two decimal places.)

The following table shows your neighorhood's demand for drinking water. Assume that only two firms (Waterland and Aquataste) produce and sell
water in this market. Each firm offers the same quality, no fixed costs are incurred in the production of water, and each firm's marginal cost is constant
and equal to $0 because both companies can pump as much water as needed without cost. Because marginal cost is constant and equal to $0, total
revenue is equal to total profit.
Price (per gallon)
Quantity (gallons)
Total Revenue (TR)
$0.25
1000
$250.00
$0.50
900
$450.00
$0.75
800
$600.00
$1.00
700
$700.00
$1.25
600
$750.00
$1.50
500
$750.00
$1.75
400
$700.00
$2.00
300
$600.00
$2.25
200
$450.00
$2.50
100
$250.00
$2.75
$0.00

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions