Assume that the optimal monopoly price

Assignment Help Business Economics

Reference no: EM13977077

Your weapons company, Top GunZ, sells fighter jets to two countries. The jets can be produced at a constant marginal cost of $10 million. The demand for jets in the two countries can be represented as: QA = 100 – 2p QB = 80 – 4p

a. Assume that the countries are allies and that you cannot charge different prices to them. Draw the combined demand curve on the axes below. (hint: hint you need to add them horizontally – think about what demand would be at p = 0; p = 20, etc.)

b. Assume that the optimal monopoly price is $30. Draw the deadweight loss from the monopoly pricing in the picture above.

c. Now assume the two countries grow hostile to each other. You can now charge them different prices. What would be the optimal prices to charge countries A and B?

d. Has the deadweight loss increased or decreased as a result of being able to charge different prices to different countries?

Reference no: EM13977077

Questions Cloud

What is the equation for intertemporal budget constraint : Abdi’s incomes in periods 1 and 2 are $200 and $100 respectively. His preferences for consumption in the two periods are perfect complement. That is, for each dollar he spends in one period, he wants to spend the same amount in other period. What is ..

If the consumers are risk neutral : The price of a new iTab computer is $500. It is known that a fraction d of the iTabs are defective. All consumers value the non-defective computers at $550 each. The same model of second-hand iTab can be found on eBay for $50, which includes shipping..

What are the maximum and minimum cycle times : What are the maximum and minimum cycle times? How much daily output will be achieved by each of those cycle times?

What would your optimal production quantity be : You are the oil minister of one of 5 key OPEC countries. The world demand for oil can be reduced to Q = 100 – p and therefore p = 100 – Q (where p is dollars and Q is in millions of barrels/day). You are considering cheating on the rest of the cartel..

Assume that the optimal monopoly price : Your weapons company, Top GunZ, sells fighter jets to two countries. The jets can be produced at a constant marginal cost of $10 million. The demand for jets in the two countries can be represented as: QA = 100 – 2p QB = 80 – 4p. Assume that the opti..

The topic is gut flora : I.INTRODUCTION A. What is Gut Flora 1.Elie Metchnikoff B. Normal flora benefits

What are thermoplastics what are thermosetting plastics : What are thermoplastics. What are thermosetting plastics. What are the uses of thermoplastics. What are the uses of thermosetting plastics. Give examples of thermoplastics. Give examples of thermosetting plastics. What the various conditions for comb..

Determine the perpetual equivalent annual maintenance cost : An engineering company is working in coal mining operation has installed an in-shaft monitoring system for oxygen tank and gear readiness for emergencies. Based on maintenance patterns for previous systems, costs are minimal for the first few years, ..

Who wins the game in subgame perfect equilibrium : There are two players. Players move sequentially starting with player 1, followed by player 2, followed by player 1 again etc. Each time that a player moves, she can choose a number from the set {1, 2, 3, 4, 5, 6, 7, 8, 9, 10}. The first player who b..

User Account

All Pages