a) Explanation In market one: Q 1 = 55 − P 1 o r , P 1 = 55 − Q T R = P Q T R = ( 55 − Q ) Q M R = d T R d Q = 55 − 2 Q M C = 5 (given) Now, MR = MC 55 - 2Q = 5 Q = 25 Units Insert the value of Q in P = 55 − Q. Price = 55 - Q Price = 55 - 25 Price = $30 Thus, the quantity is 25 units and price is $30 in the first market . Market Second: Q 2 = 70 − 2 P 2 o r , P 2 = 35 − 0.5 Q T R = P Q T R = ( 35 − 0 b) To determine To find: The new profit of the situation and new price and quantity in each market. c) To determine To find: The price and quantity when transportation cost is zero. d) To determine To find: The pricing policy under linear two part tariff.

12th Edition

ISBN: 9781337517942

Author: NICHOLSON

Publisher: Cengage

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Perfect Competition

It is the structure of the market that is said to exist when with many buyers and sellers exchanging similar commodities and its price is fixed by the market forces, demand, and supply, and a single firm cannot cause an impact over the price or market va…

Question

Chapter 14, Problem 14.6P

To determine

To find: Output and price charged in each market and the total profit of the given situation.

To determine

To find: The new profit of the situation and new price and quantity in each market.

To determine

To find: The price and quantity when transportation cost is zero.

To determine

To find: The pricing policy under linear two part tariff.

Expert Solution & Answer

Chapter 14 Solutions

Microeconomic Theory

Ch. 14 - Prob. 14.1P Ch. 14 - Prob. 14.2P Ch. 14 - Prob. 14.3P Ch. 14 - Suppose the market for Hula Hoops is monopolized...Ch. 14 - Prob. 14.5P Ch. 14 - Prob. 14.6P Ch. 14 - Prob. 14.7P Ch. 14 - Prob. 14.8P Ch. 14 - Prob. 14.9P Ch. 14 - Prob. 14.10P

Ch. 14 - Prob. 14.11P Ch. 14 - Prob. 14.12P Ch. 14 - Prob. 14.13P

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