Table 17-8
For a certain small town, the table shows the demand schedule for water. Assume the marginal cost of supplying water is constant at $4 per bottle and there are no other costs.
-Refer to Table 17-8. If there are two suppliers of water, Victor and Sami, and if they have successfully formed a cartel, then what would be the price and the market quantity?
A)The price would be $7 per bottle and the market quantity would be 600 bottles.
B)The price would be $6 per bottle and the market quantity would be 800 bottles.
C)The price would be $5 per bottle and the market quantity would be 1000 bottles.
D)The price would be $4 per bottle and the market quantity would be 1200 bottles.

Question

Table 17-8
For a certain small town, the table shows the demand schedule for water. Assume the marginal cost of supplying water is constant at $4 per bottle and there are no other costs. 
-Refer to Table 17-8. If there are two suppliers of water, Victor and Sami, and if they have successfully formed a cartel, then what would be the price and the market quantity?
A)The price would be $7 per bottle and the market quantity would be 600 bottles. 
B)The price would be $6 per bottle and the market quantity would be 800 bottles. 
C)The price would be $5 per bottle and the market quantity would be 1000 bottles. 
D)The price would be $4 per bottle and the market quantity would be 1200 bottles.

Quizplus · Accepted Answer

In a cartel, suppliers agree to act as a monopoly to maximize joint profits, typically resulting in higher prices and lower quantities than in competitive markets. The price of $7 per bottle and the market quantity of 600 bottles likely reflect this monopolistic behavior.

Table 17-8 For a Certain Small Town, the Table Shows the Demand