Cournot competition Aa Aa Consider a town in which only two residents, Zach and Kim, own wells that produce water safe for drinking. Zach and Kim can pump and sell as much water as they want at no cost. Assume that outside water cannot be transported into the town for sale. The following questions will walk you through how to compute the Cournot quantity competition outcome for these duopolists. Consider the market demand curve for water and the marginal cost for collecting water on the following graph Suppose Zach believes that Kim is going to collect 4 gallons of water to sell. On the graph, use the purple points (diamond symbols) to plot the demand curve (D1) Zach faces; then use the red points (cross symbols) to plot the marginal revenue curve (MR1) Zach faces. Finally, use the black point (X symbol) to indicate the profit-maximizing price and quantity (Profit Max 1) in this case. Dashed drop lines will automatically extend to both axes PRICE (Dollars per gallon] D1 Market Demand MR1 Profit Max 1 MC 16 20 24 QUANTITY (Gallons of water Help Clear All