Bidding for Bookstore Licenses. Paige initially has the only license to operate a bookstore in Bookville. She charges a price of ​$13 per​ book, has an average cost of ​$3 per​ book, and sells 1,501 books per year. When​ Paige's license​ expires, the city decides to auction two bookstore licenses to the highest bidders. Suppose the relevant variables​ (price, average​ cost, and output per​ firm) take on only integer valueslong dash—no fraction or decimals. a. Suppose Paige is optimistic and imagines the best possible outcome with a​ two-firm market. What is the maximum amount

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter11: Price And Output Determination: Monopoly And Dominant Firms
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Bidding for Bookstore Licenses. Paige initially has the only license to operate a bookstore in Bookville. She charges a price of ​$13 per​ book, has an average cost of ​$3 per​ book, and sells 1,501 books per year. When​ Paige's license​ expires, the city decides to auction two bookstore licenses to the highest bidders. Suppose the relevant variables​ (price, average​ cost, and output per​ firm) take on only integer valueslong dash—no fraction or decimals. a. Suppose Paige is optimistic and imagines the best possible outcome with a​ two-firm market. What is the maximum amount she is willing to pay for one of the two​ licenses? ​$ nothing  ​(Hint: How will the relevant variables​ change? What is the smallest possible change in their​ values?) b. Suppose Paige is pessimistic and imagines the worst possible outcome with a​ two-firm market. What is the maximum amount she is willing to pay for one of the two​ licenses? ​$ nothing ​(Enter your response as an​ integer.)

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