Table 17-5
The table shows the town of Driveaway's demand schedule for gasoline. Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost.

$$\begin{array} { | c | c | c | }
\hline \begin{array} { c }
\text { Quantity } \
\text { (Gallons) }
\end{array} & \begin{array} { c }
\text { Price } \
\text { (Dollars per gallon) }
\end{array} & \begin{array} { c }
\text { Total Revenue } \
\text { (Dollars) }
\end{array} \
\hline 0 & 8 & 0 \
\hline 50 & 7 & 350 \
\hline 100 & 6 & 600 \
\hline 150 & 5 & 750 \
\hline 200 & 4 & 800 \
\hline 250 & 3 & 750 \
\hline 300 & 2 & 600 \
\hline 350 & 1 & 350 \
\hline 400 & 0 & 0 \
\hline
\end{array}$$
-Refer to Table 17-5. If there are exactly two sellers of gasoline in Driveaway and if they collude, then which of the following outcomes is most likely?

Question

Table 17-5
The table shows the town of Driveaway's demand schedule for gasoline. Assume the town's gasoline seller(s) incurs a cost of $2 for each gallon sold, with no fixed cost.
​
​
 $$\begin{array} { | c | c | c | } 
\hline \begin{array} { c } 
\text { Quantity } \
\text { (Gallons) }
\end{array} & \begin{array} { c } 
\text { Price } \
\text { (Dollars per gallon) }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (Dollars) }
\end{array} \
\hline 0 & 8 & 0 \
\hline 50 & 7 & 350 \
\hline 100 & 6 & 600 \
\hline 150 & 5 & 750 \
\hline 200 & 4 & 800 \
\hline 250 & 3 & 750 \
\hline 300 & 2 & 600 \
\hline 350 & 1 & 350 \
\hline 400 & 0 & 0 \
\hline
\end{array}$$
-Refer to Table 17-5. If there are exactly two sellers of gasoline in Driveaway and if they collude, then which of the following outcomes is most likely?

Quizplus · Accepted Answer

If the two sellers collude, they will aim to maximize total profits. The table shows that total revenue is maximized at 200 gallons (with a price of $4 per gallon and total revenue of $800). However, since their cost is $2 per gallon, they would prefer a price where their profit per gallon is higher, even if total revenue is slightly lower. Selling 150 gallons at $5 each splits the quantity evenly between them (75 gallons each), ensuring a higher profit margin per gallon sold compared to the total revenue maximization point.

Table 17-5 the Table Shows the Town of Driveaway's Demand

Table 17-5
the Table Shows the Town of Driveaway's Demand