Q.1 - Consider North market with total demand P = 100 – QN and South market with total demand P = 100α – QS. If the marginal cost is 20, it can be shown the optimal single price to charge in both markets is P = 35 + 25α. If α = 0.45, which of the following statements is correct? (Assume no fixed costs) a. Only the North market will be served. b. Both North and South markets will be served. c. Neither the North nor South market will be served. d. Only the South market will be served.
Q.1 - Consider North market with total demand P = 100 – QN and South market with total demand P = 100α – QS. If the marginal cost is 20, it can be shown the optimal single price to charge in both markets is P = 35 + 25α. If α = 0.45, which of the following statements is correct? (Assume no fixed costs) a. Only the North market will be served. b. Both North and South markets will be served. c. Neither the North nor South market will be served. d. Only the South market will be served.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q.1 - Consider North market with total demand P = 100 – QN and South market with total demand P = 100α – QS. If the marginal cost is 20, it can be shown the optimal single price to charge in both markets is P = 35 + 25α. If α = 0.45, which of the following statements is correct? (Assume no fixed costs)
a. Only the North market will be served.
b. Both North and South markets will be served.
c. Neither the North nor South market will be served.
d. Only the South market will be served.
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