Table 16-1
The table below shows the total demand for viewing a rare penguin species at a local reserve.Ecotour companies have to build discreet viewing hides for tourists to view the penguins.Each ecotour company has to pay a fixed fee of $5000 for the right to build on the reserve.Assume that hides can be supplied to tourists at zero marginal cost.Tickets are sold to tourists to use the viewing hides. Any firm can change tickets by steps of 500 only.Any 500 step of quantity is assumed to be sold at the midpoint of the two prices (eg.3500 tickets would be sold for $5)
-Refer to Table 16-1.Assume that there are two profit-maximising ecotourist companies operating in this market.Further assume that they are not able to collude on price and quantity of the tickets they sell.How many tickets will be sold by each firm when this market reaches a Nash equilibrium?
A) 1000
B) 2000
C) 3000
D) 4000
Correct Answer:
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