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Homework answers / question archive / Consider a town in which only two residents, Mike and Leah, own wells that produce water safe for drinking
Consider a town in which only two residents, Mike and Leah, own wells that produce water safe for drinking. Mike and Leah can pump and sell as much water as they want at no cost. For them, revenue equals profit. The table below shows the town's demand schedule for water.
| Price ($) | Quantity (gallons) | Total profit ($) |
|---|---|---|
| $120 | 0 | $0 |
| $110 | 10 | $1,100 |
| $100 | 20 | $2,000 |
| $90 | 30 | $2,700 |
| $80 | 40 | $3,200 |
| $70 | 50 | $3,500 |
| $60 | 60 | $3,600 |
| $50 | 70 | $3,500 |
| $40 | 80 | $3,200 |
| $30 | 90 | $2,700 |
| $20 | 100 | $2,000 |
| $10 | 110 | $1,100 |
| $0 | 120 | $0 |
4.2. Mike and Leah form a cartel and behave as a monopolist. Now the profit-maximizing price is , and the total output is _ gallons.
A. $0; 120
B. $0; 60
C. $120; 0
D. $60; 60
E. $100; 20
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