Consider a model of an upstream manufacturer producing a good that it sells to a downstream retai...
Consider a model of an upstream manufacturer producing a good that it sells to a downstream retailer for resale. Both the upstream manufacturer and the downstream retailer are monopolists. Inverse market demand for the final good is given by P = 100 - Q. The marginal cost for the upstream firm is 40 per unit of good produced. The retailer faces no costs other than the cost of purchasing the good from the manufacturer.
(a) Suppose that the manufacturer sets a single wholesale price per unit. The retailer sees this price and then chooses retail price and output. What would be the equilibrium wholesale price, retail price and quantity? Show all work, and explain your answer.
Homework Answers
Add Answer to:
Consider a model of an upstream manufacturer producing a good that it sells to a downstream retai...
Consider a model of an upstream manufacturer producing a good that it sells to a downstream retai...
Consider a model of an upstream manufacturer producing a good that it sells to a downstream retailer for resale. Both the upstream manufacturer and the downstream retailer are monopolists. Inverse market demand for the final good is given by P = 100 - Q. The marginal cost for the upstream firm is 40 per unit of good produced. The retailer faces no costs other than the cost of purchasing the good from the manufacturer. b) Now, suppose that the upstream...
Q1 Consider an industry with one manufacturer M and two retail firms R1 and R2. The manufacturer produces a homogenous good at a marginal cost of 20. The retailer buys the product from the manufacture...
Q1 Consider an industry with one manufacturer M and two retail firms R1 and R2. The manufacturer produces a homogenous good at a marginal cost of 20. The retailer buys the product from the manufacturer and sells to the final consumers. Downstream demand in the industry is given by D(p) = 260 − p where p is the final retail price p. (a) As a benchmark, suppose M and R1 are vertically integrated and stop supplying R2. Which price does...
2. Suppose that there is a single producer of a good and a single retailer. The...
Suppose that there is a single producer of a good and a single retailer. The producer's marginal cost is 14 and the retailer's marginal cost is the wholesale price w plus a unit retail cost equal to 4 . The producer chooses the wholesale price and the retailer the retail price. The demand function is 26-p.(a) Write down the retailer's profit function as a function of the retail price p and the wholesale price w.(b) What is the optimal retail...
6. Consider a market in which there is a monopoly manufacturer and a monopoly retailer. The...
6. Consider a market in which there is a monopoly manufacturer and a monopoly retailer. The manufacturer M makes an input for a marginal cost of 20 per unit. This input is sold to the retailer R, who then sells to the final goods market (t o the end user). The retailer has no costs of its own (other than any price charged for the input by M). The final market demand is given by P = 200 – q....
Vertical Relationship Question Consider an industry where an upstream monopolist produces at zero cost the sole...
Vertical Relationship Question
Consider an industry where an upstream monopolist produces at zero cost the sole input needed to produce a final product. One unit of essential input is required to produce one unit of final product. The demand function for the final product is Q-40-p. (a) Assume that the final product is produced by another monopolist (downstream monopolist), which charges the final consumers a linear price p for the sale of the final product. The upstream monopolist charges the...
1. Individual Problems 22-1 Suppose that a paper mill feeds" a downstream box mill. For the...
1. Individual Problems 22-1 Suppose that a paper mill feeds" a downstream box mill. For the downstream mill, the marginal profitability of producing boxes declines with volume. For example, the first unit of boxes increases earnings by $20, the second by $18, the third by $16, and so on, until the tenth unit increases profit by just $2. The cost the upstream mill incurs for producing enough paper (one "unit of paper) to make one unit of boxes is $10.50....
please help solve. Is this also 3rd degree price discrimination? A price-discriminating monopolist faces the following...
please help solve. Is this also
3rd degree price discrimination?
A price-discriminating monopolist faces the following inverse demand functions: In Market One it is P1- 80-Q1 and in Market Two it is P2 60-Q2 Marginal cost is constant at $10. Consumers in market two can resell the good to consumers in market one at a cost of $4 per unit. Find the profit-maximizing quantity and price charged in each market subject to the resale constraint.
Question 3 You are the monopoly supplier of Soma to a pair of downstream retailers. The...
Question 3 You are the monopoly supplier of Soma to a pair of downstream retailers. The retailers are located in two different parts of town which we will refer to as market 1 and 2 respectively. The number of people in each market is M. The demand in each market for Soma as a function of the retail price is M(1-P). Buyers in market 1 never go to the retailer in market 2 to purchase and buyers in market 2...
1. A restaurant faces very high demand for its signature mousse desserts in the evening but...
1. A restaurant faces very high demand for its signature mousse desserts in the evening but is less busy during the day. Its manager estimates that inverse demand functions are pe = 34 - Qe in the evening and pd = 24 - Qd during the day, where e and d denote evening and daytime. The marginal cost of producing its dessert evening, MCe, is $8. The marginal cost of producing its dessert daytime, MCd, is $4. There is no...
Chips Computer Company assembles personal computers and sells them in the retail marketplace. The company is...
Chips Computer Company assembles personal computers and sells them in the retail marketplace. The company is organized into two profit centers: the assembly division and the distribution division. The demand curve facing the company (and the distribution division) is P=4,000 – 10Q. The marginal cost for assembly (which includes purchasing the parts) is constant at $400. The distribution division faces constant marginal distribution costs of $50 per unit. 1. What is the profit-maximizing retail price and output for the firm...
Vertical Relationship Question
Consider an industry where an upstream monopolist produces at zero cost the sole input needed to produce a final product. One unit of essential input is required to produce one unit of final product. The demand function for the final product is Q-40-p. (a) Assume that the final product is produced by another monopolist (downstream monopolist), which charges the final consumers a linear price p for the sale of the final product. The upstream monopolist charges the...
1. Individual Problems 22-1 Suppose that a paper mill feeds" a downstream box mill. For the downstream mill, the marginal profitability of producing boxes declines with volume. For example, the first unit of boxes increases earnings by $20, the second by $18, the third by $16, and so on, until the tenth unit increases profit by just $2. The cost the upstream mill incurs for producing enough paper (one "unit of paper) to make one unit of boxes is $10.50....
please help solve. Is this also
3rd degree price discrimination?
A price-discriminating monopolist faces the following inverse demand functions: In Market One it is P1- 80-Q1 and in Market Two it is P2 60-Q2 Marginal cost is constant at $10. Consumers in market two can resell the good to consumers in market one at a cost of $4 per unit. Find the profit-maximizing quantity and price charged in each market subject to the resale constraint.
Question 3 You are the monopoly supplier of Soma to a pair of downstream retailers. The retailers are located in two different parts of town which we will refer to as market 1 and 2 respectively. The number of people in each market is M. The demand in each market for Soma as a function of the retail price is M(1-P). Buyers in market 1 never go to the retailer in market 2 to purchase and buyers in market 2...
Most questions answered within 3 hours.
-
The blues made its way into many kinds of music. Eric Clapton,
The Beatles, and Elvis...
asked 1 hour ago -
8. A wave in a string has a wave function given by: y (x, t) =...
asked 1 hour ago -
If you’re standing at the bottom of a hill and asked to evaluate
it while being...
asked 2 hours ago -
1. Which region has taken the lead in the world of
e-waste handling?
a) European Union...
asked 2 hours ago -
A 8.15- g bullet from a 9-mm pistol has a velocity of 366.0 m/s.
It strikes...
asked 4 hours ago -
The outstanding bonds of Alpha Extracts have a yield to maturity
of 7.4 percent and a...
asked 4 hours ago -
The Problem: The Case of the Harmonizing Vacations
Your CEO is exploring partnering with a European...
asked 5 hours ago -
A chemical equation is balanced by adding coefficients in front
of some formulas so that the...
asked 5 hours ago -
From the literature (reference your sources): What are the
lattice parameters of calcite and aragonite? Why...
asked 6 hours ago -
Your system is rejecting the question am asking which is
preceded by a case study. It...
asked 6 hours ago -
3. On January 2, 2000, Larry creates a trust with himself as
trustee. Larry as trustee...
asked 6 hours ago -
A member of the volleyball team spikes the ball. During this
process, she changes the velocity...
asked 6 hours ago