Please compete all questions neatly and orginzied enovo courses.apia.com/a Attem

Question

Please compete all questions neatly and orginzied enovo courses.apia.com/a Attempts: Average: 4 Quantity Demanded (Gallons of water) Price Total Revenue (Dollars per gallon) (Dollars) 116 3.30 3.00 2.70 70 210 105 .10 monopolst. The profit-maonang price is [ gallons. As wt of their cartes agreeesent Raotud and Susan agree to suit erodotion eow. Therefore, Raphatu ont is per galon, and the tota as Raphael ied Susan form. carte, and behave and Susan's proft-E been successfully operating -ity. Then ons nglt before going to sleep. Raphael says te himselt, "Susan aed aren't the test of friend·armur 35 galons more than the cartel amoust. I can increase my profit even that Raphael and increaae Ask me anything

Explanation / Answer

Monopolist:

Profit maximizing price = $ 1.8

Total output = 210 gallons

Raphael's profit = 105 x 1.8 = $ 189

Susan's profit = 105 x 1.8 = $ 189

Raphael cheats:

Price of water = $ 1.5 (decreases)

Raphael's profit = 140 x 1.5 = $ 210

Susan's profit = 105 x 1.5 = $ 157.5

Susan increases production:

Price of water = $ 1.2

Raphael's profit = 140 x 1.2 = $ 168

Susan's profit = 140 x 1.2 = $ 168

Total profit = $ 336

This behavious is an example of tit-for-tat strategy

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