Use the following to answer question:
-(Table: Demand for Solar Water Heaters)Use Table: Demand for Solar Water Heaters.The marginal cost of producing solar water heaters is zero,and only two firms,Rheem and Calefi,produce them.Suppose they agree to produce only 25 water heaters each.If Rheem cheats on the agreement and produces 30 water heaters,what is the quantity effect for Rheem?
A)$1,000
B)$4,500
C)$2,000
D)$9,000

Question

Use the following to answer question: 
-(Table: Demand for Solar Water Heaters)Use Table: Demand for Solar Water Heaters.The marginal cost of producing solar water heaters is zero,and only two firms,Rheem and Calefi,produce them.Suppose they agree to produce only 25 water heaters each.If Rheem cheats on the agreement and produces 30 water heaters,what is the quantity effect for Rheem?
A)$1,000 
B)$4,500 
C)$2,000 
D)$9,000

Quizplus · Accepted Answer

The quantity effect for Rheem refers to the additional revenue Rheem would gain by selling 5 more water heaters (from 25 to 30) at the price that corresponds to the new total quantity of 50 water heaters. Without the specific table data, the general principle is that the quantity effect is calculated based on the difference in revenue from selling the additional units. Given the choices, if Rheem cheats and produces 30 water heaters, the correct answer based on the provided options and the typical understanding of quantity effect in economics would be an increase in revenue, which is option B, $4,500, assuming this value correctly reflects the additional revenue from selling 5 more units at the market price for the total quantity produced.

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