Suppose a monopoly operates two shops along a one-mile street of 3,000 consumers, has marginal cost of c = 250 and the fixed cost Fof each shop is 50,000. Also, consumers only buy one unit and have a reservation value of V=1,000. Consumers also incur there-and-back travel costs of t = 120 per mile. What is total profit if the monopolist serves the entire market with two shops?

Suppose a monopoly operates two shops along a one-mile street of 3,000 consumers, has marginal cost of c = 250 and the fixed cost Fof each shop is 50,000. Also, consumers only buy one unit and have a reservation value of V=1,000. Consumers also incur there-and-back travel costs of t = 120 per mile. What is total profit if the monopolist serves the entire market with two shops?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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