Homework Answers
Answer 18: 11
P = 8+2z
it is given price is 10 for type 1 consumer
therefore Z = 1 unit
For type 2 consumer price will be 10 +4z = 10+4 = 14
Profit is equal to price - cost
14- 3 (price of z is given to be 3 per unit) = 11
Answer 19: c) 18
Price to be taken from type 1 consumer = 10 and from type 2 consumer 14
total revenue = 10+14 = 24
Total cost = 6 (3*2 = 6)
Profit = 24-6 =18
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Use the following information in answering questions 14 - 19. Assume persons of type 1 value...
Use the following information in answering questions 14 - 19. Assume persons of type 1 value quality level z and t...
Use the following information in answering questions 14 - 19. Assume persons of type 1 value quality level z and the product itself such that the reservation price for one unit is 8 + 2z. Similarly, for a person of type 2 the reservation price is 10 + 4z. The cost of producing the product is 2 and the cost of each unit of z is 3. Assume that z can be either equal to 1 or 2. This same...
Use the following information in answering questions 1 - 9. Assume persons of type 1 value...
Use the following information in answering questions 1 - 9. Assume persons of type 1 value quality level z and the product itself such that the inverse demand for the product is given by P, = 10 - Q. + 2z. Similarly, for a person of type 2 the inverse demand for the product is given by P2 = 24 - 2Q2 + 6z. The AC and MC of producing the product with quality z is MC = AC= 2...
Use the following information in answering questions 9- 13. Assume persons of type 1 value quality...
Use the following information in answering questions 9- 13. Assume persons of type 1 value quality level z and the product itself such that the reservation price for one unit is 5+3z. Similarly, for a person of type 2 the reservation price is 10 + z. The cost of producing the product is 2 and the cost of each unit of z is 2. Assume that z can be equal to 0 or 1 or 2 9. The optimal quality...
Use the following information to answer questions 1 - 6. Assume there are three persons who choose at most one uni...
Use the following information to answer questions 1 - 6. Assume there are three persons who choose at most one unit of good X and Y with reservation prices for X and Y given in the table below. Also assume that MC = AC = 3 for good X and MC = AC = 2 for good Y. Person A Person B Person C 1 x Y 8 2 6 3 4 6. When the price of X is 6...
Use the following information to answer questions 15 - 17. Assume there are two persons who...
Use the following information to answer questions 15 - 17. Assume there are two persons who choose at most one unit of good X and Y with reservation prices for X and Y given in the table below. Also assume that MC = AC = 2 for good X and MC = AC = 1 for good Y. Person A Person B 17. A bundle containing one unit of X and one unit of Y is sold to both persons...
t=transport costs Use the following information to answer questions 1 - 6. Suppose there is one buyer located at...
t=transport costs
Use the following information to answer questions 1 - 6. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is 5. Transport costs are constant per unit of distance and the seller is located at point 6. 4. If t= 1 and...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is $5. Transport costs are constant per unit of distance. 11. When the seller charges the same price to each buyer including delivery of the...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is $5. Transport costs are constant per unit of distance. 7. If a seller must sell at only one point, 1-11, the profit maximizing location...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is $5. Transport costs are constant per unit of distance. 7. If a seller must sell at only one point, 1-11, the profit maximizing location...
Consider the following relationship between firm A and firm B. Firm A wishes to buy an...
Consider the following relationship between firm A and firm B. Firm A wishes to buy an input I from B. Firm A wants an input that is specialised to its production processes; a specialised input I costs B $10 to make. Alternatively, B can deliver a low-quality product that costs $0 to produce, but is of no benefit to A. The timing is as follows: if A decides to trade, A agrees to pay firm B a price of p...
Use the following information in answering questions 14 - 19. Assume persons of type 1 value quality level z and the product itself such that the reservation price for one unit is 8 + 2z. Similarly, for a person of type 2 the reservation price is 10 + 4z. The cost of producing the product is 2 and the cost of each unit of z is 3. Assume that z can be either equal to 1 or 2. This same...
Use the following information in answering questions 1 - 9. Assume persons of type 1 value quality level z and the product itself such that the inverse demand for the product is given by P, = 10 - Q. + 2z. Similarly, for a person of type 2 the inverse demand for the product is given by P2 = 24 - 2Q2 + 6z. The AC and MC of producing the product with quality z is MC = AC= 2...
Use the following information in answering questions 9- 13. Assume persons of type 1 value quality level z and the product itself such that the reservation price for one unit is 5+3z. Similarly, for a person of type 2 the reservation price is 10 + z. The cost of producing the product is 2 and the cost of each unit of z is 2. Assume that z can be equal to 0 or 1 or 2 9. The optimal quality...
Use the following information to answer questions 1 - 6. Assume there are three persons who choose at most one unit of good X and Y with reservation prices for X and Y given in the table below. Also assume that MC = AC = 3 for good X and MC = AC = 2 for good Y. Person A Person B Person C 1 x Y 8 2 6 3 4 6. When the price of X is 6...
Use the following information to answer questions 15 - 17. Assume there are two persons who choose at most one unit of good X and Y with reservation prices for X and Y given in the table below. Also assume that MC = AC = 2 for good X and MC = AC = 1 for good Y. Person A Person B 17. A bundle containing one unit of X and one unit of Y is sold to both persons...
t=transport costs
Use the following information to answer questions 1 - 6. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is 5. Transport costs are constant per unit of distance and the seller is located at point 6. 4. If t= 1 and...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is $5. Transport costs are constant per unit of distance. 11. When the seller charges the same price to each buyer including delivery of the...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is $5. Transport costs are constant per unit of distance. 7. If a seller must sell at only one point, 1-11, the profit maximizing location...
Use the following information to answer questions 7 - 12. Suppose there is one buyer located at points 1 through 11, one unit of distance apart. These buyers purchase at most one unit of the product when its price is less than or equal to $10. Assume the MC and AC of producing the product is $5. Transport costs are constant per unit of distance. 7. If a seller must sell at only one point, 1-11, the profit maximizing location...
Consider the following relationship between firm A and firm B. Firm A wishes to buy an input I from B. Firm A wants an input that is specialised to its production processes; a specialised input I costs B $10 to make. Alternatively, B can deliver a low-quality product that costs $0 to produce, but is of no benefit to A. The timing is as follows: if A decides to trade, A agrees to pay firm B a price of p...
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