Question 3: Assume that there are two inputs that a car producer uses: 1 engine and4 tires. 1 car is produced using 1 engine and 4 tires as inputs. Supplier 1 is producingthe engines and Supplier 2 is producing the tires. Price of 1 engine is v, and priceof 1 tire is v2. The demand for the final product (car) is P = 200 – Q. Assume thatcosts of input producers (engine and tire producers) are zero. Also, the only costs ofthe car producer are engine and tires. Other costs of the car producer are assumed tobe zero.a) Calculate the price, quantity and profits of the suppliers and car producer.Show your calculations clearlyb), Assume that the car producer and engine producer decided to merge. Whattype of merger is this? Will this merger be beneficial for the firms? Discussusing words. DO NOT draw graphs. DO NOT do any calculations.c) Can there be any negative effects of this merger to the economy? What arethey? Describe using words. DO NOT draw graphs. DO NOT do anycalculations. (7OTMC

Question 3: Assume that there are two inputs that a car producer uses: 1 engine and 4 tires. 1 car is produced using 1 engine and 4 tires as inputs. Supplier 1 is producing the engines and Supplier 2 is producing the tires. Price of 1 engine is v, and price of 1 tire is v2. The demand for the final product (car) is P = 200 – Q. Assume that costs of input producers (engine and tire producers) are zero. Also, the only costs of the car producer are engine and tires. Other costs of the car producer are assumed to be zero.

Question 3: Assume that there are two inputs that a car producer uses: 1 engine and 4 tires. 1 car is produced using 1 engine and 4 tires as inputs. Supplier 1 is producing the engines and Supplier 2 is producing the tires. Price of 1 engine is v, and price of 1 tire is v2. The demand for the final product (car) is P = 200 – Q. Assume that costs of input producers (engine and tire producers) are zero. Also, the only costs of the car producer are engine and tires. Other costs of the car producer are assumed to be zero.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Lesson 8 - Costs Question 8
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