What are the ramsey prices

Reference no: EM132198833

Question: The demand curve for product 1 is Q1 = 100 - p1. Demand for product 2 is fixed at 1,000, provided p2 ≤ 14. If good 1 is produced on its own, fixed costs are $2,000 and marginal cost is $20. If good 2 is produced on a stand-alone basis, fixed costs are $3,000 and marginal cost is $10. If the two products are produced together, total fixed costs are $4,500 and the marginal costs are unchanged.

a. What are the Ramsey prices?

b. Are the Ramsey prices subsidy free? Explain

Reference no: EM132198833

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