Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
$$\begin{array} { | c | c | }
\hline \text { Quantity } & \text { Price } \
\hline 0 & \text { R36 } \
\hline 200 & \text { R33 } \
\hline 400 & \text { R30 } \
\hline 600 & \text { R27 } \
\hline 800 & \text { R24 } \
\hline 1000 & \text { R21 } \
\hline 1200 & \text { R18 } \
\hline 1400 & \text { R15 } \
\hline 1600 & \text { R12 } \
\hline 1800 & \text { R9 } \
\hline 2000 & \text { R } 6 \
\hline 2200 & \text { R3 } \
\hline 2400 & \text { R } 0 \
\hline
\end{array}$$
a. What is the profit-maximising level of production for a group of oligopolistic firms that operate as a cartel?
b. Assume that this market is characterised by a duopoly in which collusive agreements are illegal. What market price and quantity will be associated with a Nash equilibrium?

Question

Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
 $$\begin{array} { | c | c | } 
\hline \text { Quantity } & \text { Price } \
\hline 0 & \text { R36 } \
\hline 200 & \text { R33 } \
\hline 400 & \text { R30 } \
\hline 600 & \text { R27 } \
\hline 800 & \text { R24 } \
\hline 1000 & \text { R21 } \
\hline 1200 & \text { R18 } \
\hline 1400 & \text { R15 } \
\hline 1600 & \text { R12 } \
\hline 1800 & \text { R9 } \
\hline 2000 & \text { R } 6 \
\hline 2200 & \text { R3 } \
\hline 2400 & \text { R } 0 \
\hline
\end{array}$$ 
a. What is the profit-maximising level of production for a group of oligopolistic firms that operate as a cartel?
b. Assume that this market is characterised by a duopoly in which collusive agreements are illegal. What market price and quantity will be associated with a Nash equilibrium?

Quizplus · Accepted Answer

The Answer of Assume that demand for a product that is produced at zero marginal cost is reflected in the table below.
 $$\begin{array} { | c | c | } 
\hline \text { Quantity } & \text { Price } \
\hline 0 & \text { R36 } \
\hline 200 & \text { R33 } \
\hline 400 & \text { R30 } \
\hline 600 & \text { R27 } \
\hline 800 & \text { R24 } \
\hline 1000 & \text { R21 } \
\hline 1200 & \text { R18 } \
\hline 1400 & \text { R15 } \
\hline 1600 & \text { R12 } \
\hline 1800 & \text { R9 } \
\hline 2000 & \text { R } 6 \
\hline 2200 & \text { R3 } \
\hline 2400 & \text { R } 0 \
\hline
\end{array}$$ 
a. What is the profit-maximising level of production for a group of oligopolistic firms that operate as a cartel?
b. Assume that this market is characterised by a duopoly in which collusive agreements are illegal. What market price and quantity will be associated with a Nash equilibrium?

Assume That Demand for a Product That Is Produced at Zero