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Problem: A market research shows that there are two groups of consumers, A and B, with different sensitivity to price change. Group A's demand is estimated to be QA=200-0.5P and Group B's demand is estimated to be QB=420-1.5P. Marginal Cost is assumed to be $30.
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Question: Given the information above, what is the most appropriate optimal pricing strategy?
Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.
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Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"
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