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The table shows the monthly demand schedule for a good in a duopoly market. The two producers in this market each faces $6,000 of fixed costs per month. There are no marginal costs.   What is the monthly profit for each duopolist if they evenly split the quantity a monopolist would produce? Suppose duopolist A decides to increase production by 200 units. How much will each duopolist produce and what price will they charge? How much profit will each duopolist earn?

The table shows the monthly demand schedule for a good in a duopoly market. The two producers in this market each faces $6,000 of fixed costs per month. There are no marginal costs.   What is the monthly profit for each duopolist if they evenly split the quantity a monopolist would produce? Suppose duopolist A decides to increase production by 200 units. How much will each duopolist produce and what price will they charge? How much profit will each duopolist earn?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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8. The table shows the monthly demand schedule for a good in a duopoly market. The two producers in this market each faces $6,000 of fixed costs per month. There are no marginal costs.

 

  1. What is the monthly profit for each duopolist if they evenly split the quantity a monopolist would produce?
  2. Suppose duopolist A decides to increase production by 200 units. How much will each duopolist produce and what price will they charge? How much profit will each duopolist earn?

 

This table displays data related to quantity, pricing, total revenue, and marginal revenue. It is structured to provide insight into how these economic factors interact at varying levels of quantity. | **Quantity** | **Price ($)** | **Total Revenue ($)** | **Marginal Revenue ($)** | |--------------|---------------|-----------------------|-------------------------| | 0 | 40 | 0 | — | | 200 | 35 | 7,000 | 35 | | 400 | 30 | 12,000 | 25 | | 600 | 25 | 15,000 | 15 | | 800 | 20 | 16,000 | 5 | | 1,000 | 15 | 15,000 | −5 | | 1,200 | 10 | 12,000 | −15 | | 1,400 | 5 | 7,000 | −25 | | 1,600 | 0 | 0 | −35 | ### Explanation: - **Quantity:** Represents the number of units produced or sold. - **Price ($):** The selling price per unit, decreasing as more units are produced or sold (indicating a typical demand curve). - **Total Revenue ($):** The total income generated from sales, peaking at 800 units with $16,000 before declining. - **Marginal Revenue ($):** The additional revenue gained from selling one more unit. This value decreases as the quantity increases, eventually becoming negative, which suggests that selling additional units beyond a certain point reduces total revenue. This table is useful for understanding the relationship between price, quantity, and revenue, and highlights the concept of diminishing returns in the context of economic production.
Transcribed Image Text:This table displays data related to quantity, pricing, total revenue, and marginal revenue. It is structured to provide insight into how these economic factors interact at varying levels of quantity. | **Quantity** | **Price ($)** | **Total Revenue ($)** | **Marginal Revenue ($)** | |--------------|---------------|-----------------------|-------------------------| | 0 | 40 | 0 | — | | 200 | 35 | 7,000 | 35 | | 400 | 30 | 12,000 | 25 | | 600 | 25 | 15,000 | 15 | | 800 | 20 | 16,000 | 5 | | 1,000 | 15 | 15,000 | −5 | | 1,200 | 10 | 12,000 | −15 | | 1,400 | 5 | 7,000 | −25 | | 1,600 | 0 | 0 | −35 | ### Explanation: - **Quantity:** Represents the number of units produced or sold. - **Price ($):** The selling price per unit, decreasing as more units are produced or sold (indicating a typical demand curve). - **Total Revenue ($):** The total income generated from sales, peaking at 800 units with $16,000 before declining. - **Marginal Revenue ($):** The additional revenue gained from selling one more unit. This value decreases as the quantity increases, eventually becoming negative, which suggests that selling additional units beyond a certain point reduces total revenue. This table is useful for understanding the relationship between price, quantity, and revenue, and highlights the concept of diminishing returns in the context of economic production.
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