Question

(Gallons) (Dollars per gallon) (Dollars) 0 36 0 40 33 1,320 2.400 80 30 120 27 3,240 3,840 160 24 200 21 4,200 240 18 4,320 280 15 4,200 320 12 3,840 360 9 3.240 400 6 2.400 440 3 1.320 480 0 0 Refer to Table 17.1. Suppose the town enacts new antitrust laws that prohibit Celia and Venya from operating as a monopoly. How many gallons of water will be produced and sold once Celia and Venya reach a Nash equilibrium? 280 360 0 240 320

Answer 1

Once they reach the Nash Equilibrium, they would actually get to reduce the gallons of water that will give them maximum revenue and in this regard the maximum revenue of 4320 is obtained at 240 gallons of water with the price of $18, which is why

(c)240 is the answer to this question

Because maximum revenue is obtained at 240 gallons

(a,b,d) are wrong