Scenario $12\mathrm{.}3$:

Suppose a stream is discovered whose water has remarkable healing powers. You decide to bottle the liquid and sell it$.$ The market demand curve is linear and is given as follows:

$P=30-Q$

The marginal cost to produce this new drink is $$3.$

Refer to Scenario $12\mathrm{.}3.$ What price would this new drink sell for if it sold in a competitive market?

A$)0$

B$)$ $$3$

C$)$ $$13\mathrm{.}50$

D$)$ $$16\mathrm{.}50$

E$)$ $$27$

Answer: B

Diff: $3$

Section: $12\mathrm{.}2$

Refer to Scenario $12\mathrm{.}3.$ What is the monopoly price of this new drink?

A$)0$

B$)$ $$3$

C$)$ $$13\mathrm{.}50$

D$)$ $$16\mathrm{.}50$

E$)$ $$27$

Answer: D

Diff: $3$

Section: $12\mathrm{.}2$

Refer to Scenario $12\mathrm{.}3.$ What will be the price of this new drink in the long run if the industry is a Cournot duopoly?

A$)$ $$3$

B$)$ $$9$

C$)$ $$12$

D$)$ $$13\mathrm{.}50$

E$)$ none of the above