Step 1
Work It Out
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To preserve the North Atlantic fish stocks, it is decided that only two fishing fleets, one from the United States and the other from the European Union (EU), can fish in those waters. The accompanying table shows the market demand schedule per week for fish from these waters. The only costs are fixed costs, so fishing fleets maximize profit by maximizing revenue.
| Price of fish (per pound) | Quantity of fish demanded (pounds) |
|---|---|
| $17 | 1,800 |
| 16 | 2,000 |
| 15 | 2,100 |
| 14 | 2,200 |
| 12 | 2,300 |
Table
If both fishing fleets collude, what is the revenue maximizing output for the North Atlantic fishery? What price will a pound of fish sell for? (Hint: It may help to calculate total revenue.)
Revenue maximizing output under collusion is: pounds
Price of fish per pound that maximizes revenue under collusion: $
Correct! For further review see section, “A Duopoly Example.”
Incorrect. The revenue-maximizing output is 2,000 pounds per week, which will fetch a price of $16 per pound. We can see this in the table that shows the calculations for total revenue at all levels of output:
If both fishing fleets collude, what is the revenue maximizing output for the North Atlantic fishery? What price will a pound of fish sell for? (Hint: It may help to calculate total revenue.)
Correct! For further review see section, “A Duopoly Example.”
Incorrect. The revenue-maximizing output is 2,000 pounds per week, which will fetch a price of $16 per pound. We can see this in the table that shows the calculations for total revenue at all levels of output:
If both fishing fleets collude, what is the revenue maximizing output for the North Atlantic fishery? What price will a pound of fish sell for? (Hint: It may help to calculate total revenue.)