Consider a town in which only two residents, Jake and Latasha, own wells that pr
ID: 1115866 • Letter: C
Question
Consider a town in which only two residents, Jake and Latasha, own wells that produce water safe for drinking. Jake and Latasha can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water
Price (Dollars per gallon) 6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 Quantity Demanded (Gallons of water) Total Revenue (Dollars) 0 0 90 135 180 225 270 315 360 405 450 495 248 450 608 720 788 810 788 720 2.00 1.50 608 450 248 1.00 0.50 540 0Explanation / Answer
Answer to blank 1: $3.00
Answer to blank 2: 270
Answer to blank 3: 405 (i.e.810 / 2 = $405)
Answer to blank 4: 405 (i.e.810 / 2 = $405)
Answer to blank 5: decreases
Answer to blank 6: 2.50
Answer to blank 7: 450
Answer to blank 8: 338
Explanation:
The current total production = (135 + 45) + 135 = 315
Jake's profit = $2.50 * 180 = $450
Latasha's profit = $2.50 * 135 = 337.50 (we can round it as $338)
Answer to blank 9: 360
Answer to blank 10: 360
Answer to blank 11: 720
Explanation:
Now the total production = (135 + 45) + (135 + 45) = 360 gallon.
Price = $2.00
Profit of each = 720 / 2 = $360