Table 17-3 The table shows the demand schedule for a particular product. \[\begin{array} { | c | c | } \hline \begin{array} { c } \text { Quantity Demanded } \\ \text { (Units) } \end{array} & \begin{array} { c } \text { Price } \\ \text { (Dollars per unit) } \end{array} \\ \hline 0 & 16 \\ \hline 1 & 14 \\ \hline 2 & 12 \\ \hline 3 & 10 \\ \hline 4 & 8 \\ \hline 5 & 6 \\ \hline 6 & 4 \\ \hline 7 & 2 \\ \hline 8 & 0 \\ \hline \end{array}\] -Refer to Table 17-3. Suppose the market for this product is served by two firms that have formed a cartel. If the marginal cost of production is $4 and each firm incurs a fixed cost of $6, the combined profit of the cartel will be

A) $6 B) $12 C) $24 D) $32 A) $6 B) $12 C) $24 D) $32

Table 17-1 Imagine a small town in which only two residents, Sydney and Matthew, own wells that produce safe drinking water. Each week Sydney and Matthew work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Sydney and Matthew can pump as much water as they want without cost so that the marginal cost of water equals zero. The town's weekly demand schedule and total revenue schedule for water is shown in the following table: \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\ \text { (Gallons) } \end{array} & \begin{array} { c } \text { Price } \\ \text { (Dollars per gallon) } \end{array} & \begin{array} { c } \text { Total Revenue and Total Profit } \\ \text { (Dollars) } \end{array} \\ \hline 0 & 48 & 0 \\ \hline 90 & 44 & 3,960 \\ \hline 180 & 40 & 7,200 \\ \hline 270 & 36 & 9,720 \\ \hline 360 & 32 & 11,520 \\ \hline 450 & 28 & 12,600 \\ \hline 540 & 24 & 12,960 \\ \hline 630 & 20 & 12,600 \\ \hline 720 & 16 & 11,520 \\ \hline 810 & 12 & 9,720 \\ \hline 900 & 8 & 7,200 \\ \hline 990 & 4 & 3,960 \\ \hline 1,080 & 0 & 0 \\ \hline \end{array}\] -Refer to Table 17-1. If Sydney and Matthew operate as a profit-maximizing monopoly in the market for water, how much profit will each of them earn, assuming that the two producers split the market equally?

A) $5,760 B) $6,480 C) $6,300 D) $12,960 A) $5,760 B) $6,480 C) $6,300 D) $12,960

Table 17-4 Only two firms, JKL and XYZ, sell a particular product. The following table shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost. \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Price } \\ \text { (Dollars per unit) } \end{array} & \begin{array} { c } \text { Quantity Demanded } \\ \text { (Units) } \end{array} & \begin{array} { c } \text { Total Revenue } \\ \text { (Dollars) } \end{array} \\ \hline 28 & 0 & 0 \\ \hline 26 & 5 & 130 \\ \hline 24 & 10 & 240 \\ \hline 22 & 15 & 330 \\ \hline 20 & 20 & 400 \\ \hline 18 & 25 & 450 \\ \hline 16 & 30 & 480 \\ \hline 14 & 35 & 490 \\ \hline 12 & 40 & 480 \\ \hline 10 & 45 & 450 \\ \hline 8 & 50 & 400 \\ \hline 6 & 55 & 330 \\ \hline 4 & 60 & 240 \\ \hline 2 & 65 & 130 \\ \hline 0 & 70 & 0 \\ \hline \end{array}\] -Refer to Table 17-4. JKL and XYZ agree to maximize joint profits. However, while JKL produces the agreed-upon amount, XYZ breaks the agreement and produces 5 more than agreed. How much profit does XYZ make?

A) $100.00 B) $140.00 C) $240.00 D) $120.00 A) $100.00 B) $140.00 C) $240.00 D) $120.00

Table 17-2 The information in the following table shows the total demand for internet radio subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $20,000 (per year) and that the marginal cost of providing an additional subscription is always $16. \[\begin{array} { | c | c | } \hline \begin{array} { c } \text { Quantity Demanded } \\ \text { (Internet radio } \\ \text { sub scriptions) } \end{array} & \begin{array} { c } \text { Price } \\ \text { (Dollars per subscription } \\ \text { per year) } \end{array} \\ \hline 0 & 64 \\ \hline 500 & 60 \\ \hline 1,000 & 56 \\ \hline 1,500 & 52 \\ \hline 2,000 & 48 \\ \hline 2,500 & 44 \\ \hline 3,000 & 40 \\ \hline 3,500 & 36 \\ \hline 4,000 & 32 \\ \hline 4,500 & 28 \\ \hline 5,000 & 24 \\ \hline 5,500 & 20 \\ \hline 6,000 & 16 \\ \hline 6,500 & 12 \\ \hline 7,000 & 8 \\ \hline 7,500 & 4 \\ \hline 8,000 & 0 \\ \hline \end{array}\] -Refer to Table 17-2. Assume that there are two profit-maximizing internet radio providers operating in this market. Further assume that they are not able to collude on the price and quantity of subscriptions to sell. How much profit will each firm earn when this market reaches a Nash equilibrium?

A) $12,000 B) $16,000 C) $52,000 D) $64,000 A) $12,000 B) $16,000 C) $52,000 D) $64,000

Table 17-2 The information in the following table shows the total demand for internet radio subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $20,000 (per year) and that the marginal cost of providing an additional subscription is always $16. \[\begin{array} { | c | c | } \hline \begin{array} { c } \text { Quantity Demanded } \\ \text { (Internet radio } \\ \text { sub scriptions) } \end{array} & \begin{array} { c } \text { Price } \\ \text { (Dollars per subscription } \\ \text { per year) } \end{array} \\ \hline 0 & 64 \\ \hline 500 & 60 \\ \hline 1,000 & 56 \\ \hline 1,500 & 52 \\ \hline 2,000 & 48 \\ \hline 2,500 & 44 \\ \hline 3,000 & 40 \\ \hline 3,500 & 36 \\ \hline 4,000 & 32 \\ \hline 4,500 & 28 \\ \hline 5,000 & 24 \\ \hline 5,500 & 20 \\ \hline 6,000 & 16 \\ \hline 6,500 & 12 \\ \hline 7,000 & 8 \\ \hline 7,500 & 4 \\ \hline 8,000 & 0 \\ \hline \end{array}\] -Refer to Table 17-2. Assume there are two internet radio providers that operate in this market. If they are able to collude on the quantity of subscriptions that will be sold and on the price that will be charged for subscriptions, then their agreement will stipulate that

A) each firm will charge a price of $40 and each firm will sell 3,000 subscriptions. B) each firm will charge a price of $40 and each firm will sell 1,500 subscriptions. C) each firm will charge a price of $32 and each firm will sell 2,000 subscriptions. D) each firm will charge a price of $20 and each firm will sell 3,000 subscriptions. A) each firm will charge a price of $40 and each firm will sell 3,000 subscriptions. B) each firm will charge a price of $40 and each firm will sell 1,500 subscriptions. C) each firm will charge a price of $32 and each firm will sell 2,000 subscriptions. D) each firm will charge a price of $20 and each firm will sell 3,000 subscriptions.

Table 17-1 Imagine a small town in which only two residents, Sydney and Matthew, own wells that produce safe drinking water. Each week Sydney and Matthew work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Sydney and Matthew can pump as much water as they want without cost so that the marginal cost of water equals zero. The town's weekly demand schedule and total revenue schedule for water is shown in the following table: \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\ \text { (Gallons) } \end{array} & \begin{array} { c } \text { Price } \\ \text { (Dollars per gallon) } \end{array} & \begin{array} { c } \text { Total Revenue and Total Profit } \\ \text { (Dollars) } \end{array} \\ \hline 0 & 48 & 0 \\ \hline 90 & 44 & 3,960 \\ \hline 180 & 40 & 7,200 \\ \hline 270 & 36 & 9,720 \\ \hline 360 & 32 & 11,520 \\ \hline 450 & 28 & 12,600 \\ \hline 540 & 24 & 12,960 \\ \hline 630 & 20 & 12,600 \\ \hline 720 & 16 & 11,520 \\ \hline 810 & 12 & 9,720 \\ \hline 900 & 8 & 7,200 \\ \hline 990 & 4 & 3,960 \\ \hline 1,080 & 0 & 0 \\ \hline \end{array}\] -Refer to Table 17-1. What is the socially efficient quantity of water?

A) 0 gallons B) 540 gallons C) 810 gallons D) 1,080 gallons A) 0 gallons B) 540 gallons C) 810 gallons D) 1,080 gallons

Table 17-1 Imagine a small town in which only two residents, Sydney and Matthew, own wells that produce safe drinking water. Each week Sydney and Matthew work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Sydney and Matthew can pump as much water as they want without cost so that the marginal cost of water equals zero. The town's weekly demand schedule and total revenue schedule for water is shown in the following table: \[\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Quantity } \\ \text { (Gallons) } \end{array} & \begin{array} { c } \text { Price } \\ \text { (Dollars per gallon) } \end{array} & \begin{array} { c } \text { Total Revenue and Total Profit } \\ \text { (Dollars) } \end{array} \\ \hline 0 & 48 & 0 \\ \hline 90 & 44 & 3,960 \\ \hline 180 & 40 & 7,200 \\ \hline 270 & 36 & 9,720 \\ \hline 360 & 32 & 11,520 \\ \hline 450 & 28 & 12,600 \\ \hline 540 & 24 & 12,960 \\ \hline 630 & 20 & 12,600 \\ \hline 720 & 16 & 11,520 \\ \hline 810 & 12 & 9,720 \\ \hline 900 & 8 & 7,200 \\ \hline 990 & 4 & 3,960 \\ \hline 1,080 & 0 & 0 \\ \hline \end{array}\] -Refer to Table 17-1. Suppose the town enacts new antitrust laws that prohibit Sydney and Matthew from operating as a monopoly. What will be the price of water once Sydney and Matthew reach a Nash equilibrium?

A) $12 B) $16 C) $20 D) $24 A) $12 B) $16 C) $20 D) $24

Table 17-2 The information in the following table shows the total demand for internet radio subscriptions in a small urban market. Assume that each company that provides these subscriptions incurs an annual fixed cost of $20,000 (per year) and that the marginal cost of providing an additional subscription is always $16. \[\begin{array} { | c | c | } \hline \begin{array} { c } \text { Quantity Demanded } \\ \text { (Internet radio } \\ \text { sub scriptions) } \end{array} & \begin{array} { c } \text { Price } \\ \text { (Dollars per subscription } \\ \text { per year) } \end{array} \\ \hline 0 & 64 \\ \hline 500 & 60 \\ \hline 1,000 & 56 \\ \hline 1,500 & 52 \\ \hline 2,000 & 48 \\ \hline 2,500 & 44 \\ \hline 3,000 & 40 \\ \hline 3,500 & 36 \\ \hline 4,000 & 32 \\ \hline 4,500 & 28 \\ \hline 5,000 & 24 \\ \hline 5,500 & 20 \\ \hline 6,000 & 16 \\ \hline 6,500 & 12 \\ \hline 7,000 & 8 \\ \hline 7,500 & 4 \\ \hline 8,000 & 0 \\ \hline \end{array}\] -Refer to Table 17-2. Suppose there is only one internet radio provider in this market and it seeks to maximize its profit. The company will

A) sell 2,000 subscriptions and charge a price of $48 for each subscription. B) sell 3,000 subscriptions and charge a price of $40 for each subscription. C) sell 4,000 subscriptions and charge a price of $32 for each subscription. D) sell 5,000 subscriptions and charge a price of $24 for each subscription. A) sell 2,000 subscriptions and charge a price of $48 for each subscription. B) sell 3,000 subscriptions and charge a price of $40 for each subscription. C) sell 4,000 subscriptions and charge a price of $32 for each subscription. D) sell 5,000 subscriptions and charge a price of $24 for each subscription.