Determine the output level-wholesale price, Macroeconomics

Assignment Help:

Assume an industry with one upstream and one downstream monopoly. The upstream monopoly produces Q, which is sold solely to the downstream monopoly. The downstream monopoly faces the inverse demand curve PR = 1 - Q, where PR is the retail price of Q. further assume that the production of Q exhibits constant marginal costs cQ.

g) Assume that the two monopolies merge. What is the output level and price in equilibrium?

h) Determine the output level, wholesale price, and retail price and deadweight loss before any vertical integration takes place. [Hint: solve this problem backwards, start with the downstream firm, taking the price for the upstream monopoly as given. Then solve the problem for the upstream firm using the demand of the downstream firm]

i) Compare the results you obtained in (a) and (b) using a graph. Show the loss in terms of Consumer Surplus and in terms of Deadweight Loss from Double Marginalization.

 


Related Discussions:- Determine the output level-wholesale price

Find the equilibrium quantity, Find the Equilibrium Quantity In a smal...

Find the Equilibrium Quantity In a small town only two candy shops operate and they compete with each other in quantity. Consumers do not differentiate between candies sold by

What are the advantages of capitalism, The benefits of capitalism are that ...

The benefits of capitalism are that the governments have limited control over other business, which lets business compete.

As the result of a tariff who will benefit, In general, who will benefit as...

In general, who will benefit as the result of a tariff? Domestic Producers Domestic Consumers The domestic government a. I only b. II only c. both I and III d.

Market structures, illustrate and discuss the market structures competitive...

illustrate and discuss the market structures competitiveand non competitive for price determination

Velocity of money is constant, Suppose that this year's the money supply is...

Suppose that this year's the money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5trillion. a. What is the price level? b. What is the velocity of money

Show the different kinds of unemployment, Q. Show the Different kinds of un...

Q. Show the Different kinds of unemployment? All unemployed individuals are presumed to belong to exactly one of these categories so that if we sum unemployment from each categ

Unemployment rate, Unemployment rate (LUNEMP): A key variable to assess...

Unemployment rate (LUNEMP): A key variable to assess the performance of any economy when an economy is growing, the unemployment rate will fall as job creation increases and in

What is real gross domestic product, What is Real GDP To be able to ma...

What is Real GDP To be able to make reasonable comparisons of GDP over time, we must adjust for inflation. For instance, if prices are doubled over 1 year then GDP would doubl

Help, i want an answer for my q Question 3 (5 marks) Most studies of firm...

i want an answer for my q Question 3 (5 marks) Most studies of firms’ long run costs have found that average costs decline as firms produce increasingly larger output levels (eco

Elasticity with respect to the price of gasoline, Suppose the annual demand...

Suppose the annual demand function for the Honda Accord is Qd = 430 - 10 PA + 10 PC - 10 PG where PA and PC are the prices of the Accord and the Toyota Camry respectively (in thous

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd