Table 17-2. The table shows the town of Pittsville's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline.

-Refer to Table 17-2.If there are exactly two sellers of gasoline in Pittsville and if they collude,then which of the following outcomes is most likely?

Question

Table 17-2. The table shows the town of Pittsville's demand schedule for gasoline. For simplicity, assume the town's gasoline seller(s) incur no costs in selling gasoline.
 
-Refer to Table 17-2.If there are exactly two sellers of gasoline in Pittsville and if they collude,then which of the following outcomes is most likely?

Quizplus · Accepted Answer

In a scenario where two sellers collude, they would want to maximize their profits by jointly producing where marginal cost equals marginal revenue. In this case, the marginal revenue for each additional gallon sold is $5, which is greater than the marginal cost of $0. Therefore, the sellers would each sell 250 gallons of gasoline and charge a price of $5, resulting in a total revenue of $2,500 and a profit of $2,500 for the two sellers combined. Any other option would result in lower profit.