None of the other answers.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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A monopoly manufacturer sells its good x to a monopoly retailer at the per-unit price k. The
good from the manufacturer is the only input the retailer needs. Thus, the retailer's production
function is y=X, where y is the quantity the retailer sells to the consumers and x is the quantity
the retailer buys from the manufacturer. The demand from the consumers to the retailer is
y=16-2p, where p is the per-unit price the retailer charges consumers. Assume the
manufacture produces at a constant average variable cost 2. What is the ratio x/Xmerge
between the quantity x the consumers end up consuming when manufacturer and retailer
remain separate with the quantity Xmerge the consumers would consume if the two firms
merged?
O a. None of the other answers.
O b. 2
O c. 1/3
O d. 1
O e. 1/2
Transcribed Image Text:A monopoly manufacturer sells its good x to a monopoly retailer at the per-unit price k. The good from the manufacturer is the only input the retailer needs. Thus, the retailer's production function is y=X, where y is the quantity the retailer sells to the consumers and x is the quantity the retailer buys from the manufacturer. The demand from the consumers to the retailer is y=16-2p, where p is the per-unit price the retailer charges consumers. Assume the manufacture produces at a constant average variable cost 2. What is the ratio x/Xmerge between the quantity x the consumers end up consuming when manufacturer and retailer remain separate with the quantity Xmerge the consumers would consume if the two firms merged? O a. None of the other answers. O b. 2 O c. 1/3 O d. 1 O e. 1/2
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