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Find the profit maximizing price and quantity for grinch

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Reference no: EM132414912

Grinch is the sole owner of a mineral water spring that has infinite supply of mineral water. It cost Grinch $2 per gallon to bottle mineral water. The inverse demand curve for bottled mineral water is p(y) = 20 - 0.2y, where p is the price per gallon and y is the number of gallons sold.

(a) Find the profit maximizing price and quantity for Grinch.

(b) Suppose, now, that Grinch's neighbor, Grubb finds a mineral spring that produces mineral water that is just as good as Grinch's water, but that it costs Grubb $6 per gallon to get his water out of the ground and bottle it. The inverse market demand for mineral water remains as before. Find the Cournot equilibrium of this game.

Reference no: EM132414912

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