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Suppose that a manufacturer is a monopolist in selling some product to a number of competitive retailers at wholesale price w. The manufacturer has marginal cost of $10 per unit. Each retailer pays w to the manufacturer and charges p for each unit it sells to the consumers. The demand that retailers face in final product market is given by Q = 110 ? p.
a. What is the market equilibrium retail price p? What is the profit-maximization wholesale price w for the manufacturer to set? How many units of products will the retailer sell and what will the profit be? Calculate the consumer surplus.
b. Consider a proposed vertical merger between the manufacturer and one of the retailers. Derive the post-merger market outcomes, i.e. retail price, quantity, profit and consumer surplus.
c. Compare your answers in (a) and (b). How will the vertical merger affect profit and consumer welfare?
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Suppose the market for gelato is perfectly competitive, and that gelato is a constant cost industry. The long-run cost function for producing gelato is TC(Q) = Q^3 ? 2Q^2 + 5Q. The demand for gelato is Q = 300 - 2p
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solve for consumer surplus, producer surplus, government revenue, and total surplus with the tax. solve for the change in consumer surplus, the change in producer surplus, the change in government revenue, and change in total surplus.
In what sense does the Fed "create money"? Suppose that the minimum required reserve ratio for banks was 1/11. Also suppose that banks held no excess reserves and that currency in circulation was unchanged. What action in the Treasury bill market wou..
q.think of another good that you have purchased recently or you could continue with the good you selected in tda i. be
Draw a supply- demand diagram of the federal funds market and show the effects of a Federal Reserve Purchase of $85 billion in US Treasury Notes during a Quantitative Easing Campaign after the Fed has already lowered its Fed funds target to 0 - .25%.
In principle, the government could impose separate minimum wages on distinct occupations. Suppose the government imposed a minimum wage of 20 percent over their respective market wages for ditch-diggers and university professors.
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