Total Quantity (in gallons) Price Revenue $8 $0 50 350 100 600 150 750 200 80 250 3. 750 300 600 350 350 400 Imagine a small town in a remote area where only two residents. Maria and Miguel, own dairies that produce milk. Their respective dairies are equal in size. Each week Maria and Miguel work together to decide how many galons of milk to produce and wha: price to charge. 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 and there are no fixed costs. The weekly town demand schedule and total revenue schedule for milk is shown in the tabl above. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a cartel. Assuming that each producer can only modify quantity in increments of 50, which of the following is consistent with the Nash equilibrium for this scenario? Milk will sell for $2 per gallon. O Miguel will sell 100 gallons. Maria will charge a price of 55 for each gallon. Milk will sell for $4 per galion.

Total Quantity (in gallons) Price Revenue $8 $0 50 350 100 600 150 750 200 80 250 3. 750 300 600 350 350 400 Imagine a small town in a remote area where only two residents. Maria and Miguel, own dairies that produce milk. Their respective dairies are equal in size. Each week Maria and Miguel work together to decide how many galons of milk to produce and wha: price to charge. 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 and there are no fixed costs. The weekly town demand schedule and total revenue schedule for milk is shown in the tabl above. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a cartel. Assuming that each producer can only modify quantity in increments of 50, which of the following is consistent with the Nash equilibrium for this scenario? Milk will sell for $2 per gallon. O Miguel will sell 100 gallons. Maria will charge a price of 55 for each gallon. Milk will sell for $4 per galion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Comparative Advantage and Absolute Advantage Analysis

The theory of absolute advantage was given by Adam Smith in the year 1776.

Question

Q34

Quantity (in
gallons)
Total
Price
Revenue
$8
$0
50
350
100
6.
600
150
5
750
200
800
250
750
300
2
600
350
1
350
400
Imagine a small town in a remote area where only two residents, Maria and Miguel, own dairies that produce milk. Their respective dairies are equal in size. Each week Maria and Miguel work together to decide how many gallons of milk to produce and what price to
charge. 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 and there are no fixed costs. The weekly town demand schedule and total revenue schedule for milk is shown in the table
above. Suppose the town enacts new antitrust laws that prohibit Maria and Miguel from operating as a cartel. Assuming that each producer can only modify quantity in increments of 50, which of the following is consistent with the Nash equilibrium for this scenario?
Milk will sell for $2 per gallon.
Miguel will sell 100 gallons.
Maria will charge a price of 55 for each gallon.
Milk will sell for $4 per gallon.

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