Paul's firm produces the same good as Sal's firm. The total cost of producing qp units in Paul's firm is Cp( qp ) = 8.6 qp + 1.1. The total cost of producing qs units in Sal's firm is Cs( qs ) = 8.6 qs + 1.1. What is the efficiency loss if each person's firm produces half of a total of 523 units?

Paul's firm produces the same good as Sal's firm. The total cost of producing qp units in Paul's firm is Cp( qp ) = 8.6 qp + 1.1. The total cost of producing qs units in Sal's firm is Cs( qs ) = 8.6 qs + 1.1. What is the efficiency loss if each person's firm produces half of a total of 523 units?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter18: Auctions

Section: Chapter Questions

Problem 18.6IP

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Question

Paul's firm produces the same good as Sal's firm.

The total cost of producing q_p units in Paul's firm is C_p( q_p ) = 8.6 q_p + 1.1.

The total cost of producing q_s units in Sal's firm is C_s( q_s ) = 8.6 q_s + 1.1.

What is the efficiency loss if each person's firm produces half of a total of 523 units?

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