Question 7 0/1 pts Table 17-2 Imagine a small town in which only two residents,

Question

Question 7 0/1 pts Table 17-2 Imagine a small town in which only two residents, Abby and Brad, own wells that produce safe drinking water. Each weck Abby and Brad work together to decide how many gallons of water to pump. They bring water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Abby and Brad can pump as much water as they want without cost so that the marginal cost is zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: Quantity in gallons) Total Revenue and Total Profit) 12 511 $11 10 32 35 36 35 S4 32 $27 20

Explanation / Answer

7) If this market were perfectly competitive,then

option (A) 12 gallons would be produced and sold.

In perfectly competitive market the total revenue for all the firms are zero so that it is neither making profit nor making loss.It happens when 12 gallons are produced and sold so that there is no revenue.

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