{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Krugman_SolMan_CH15

# Krugman_SolMan_CH15 - Krugman_SolMan_CH15 4:24 PM Page 125...

This preview shows pages 1–3. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
b. Now the Sopranos sell 1,500 gallons and the Contraltos sell 1,000 gallons, for a total output of 2,500 gallons. So the price falls to \$70 per gallon. The Sopranos have revenue of 1,500 × \$70 = \$105,000 and cost of 1,500 × \$40 = \$60,000. So their profit is \$105,000 \$60,000 = \$45,000. The Contraltos have revenue of 1,000 × \$70 = \$70,000 and cost of 1,000 × \$40 = \$40,000. So their profit is \$70,000 \$40,000 = \$30,000. c. If both the Contraltos and the Sopranos sell 1,500 gallons each, the total output in this duopoly is 3,000 gallons, and the price falls to \$60 per gallon. Each family has revenue of 1,500 × \$60 = \$90,000 and cost of 1,500 × \$40 = \$60,000. Each family’s profit therefore is \$30,000.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 6

Krugman_SolMan_CH15 - Krugman_SolMan_CH15 4:24 PM Page 125...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online