Homework Help is Here – Start Your Trial Now!
Business
Economics
Suppose that the inverse demand curve for iced tea is given by p = 70 12q, where p is the price per bottle paid by consumers and q is the number of bottles purchased by consumers. Iced tea is supplied to consumers by a monopolistic distributor who buys from a monopolistic producer, who is able to produce iced tea at zero cost. The producer charges the distributor a price of c per bottle. Given his marginal cost of c per unit, the distributor chooses an output to maximize his own profits. Knowing that this is what the distributor will do, the producer sets his price c in order to maximize his revenue. A. How much will consumers pay for iced tea? B. Now assume that the producer buys the distributor and markets the good directly to the consumers. How much will consumers pay for Ice tea then? C. How much is the producer willing to pay to purchase the distributor?

Suppose that the inverse demand curve for iced tea is given by p = 70 12q, where p is the price per bottle paid by consumers and q is the number of bottles purchased by consumers. Iced tea is supplied to consumers by a monopolistic distributor who buys from a monopolistic producer, who is able to produce iced tea at zero cost. The producer charges the distributor a price of c per bottle. Given his marginal cost of c per unit, the distributor chooses an output to maximize his own profits. Knowing that this is what the distributor will do, the producer sets his price c in order to maximize his revenue. A. How much will consumers pay for iced tea? B. Now assume that the producer buys the distributor and markets the good directly to the consumers. How much will consumers pay for Ice tea then? C. How much is the producer willing to pay to purchase the distributor?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
See similar textbooks
icon
Related questions
Question

these are practice questions. Assume inverse demand is P=70-12q

= Suppose that the inverse demand curve for iced tea is given by p : 70 12q, where p is the price per bottle paid by consumers and q is the number of bottles purchased by consumers. Iced tea is supplied to consumers by a monopolistic distributor who buys from a monopolistic producer, who is able to produce iced tea at zero cost. The producer charges the distributor a price of c per bottle. Given his marginal cost of c per unit, the distributor chooses an output to maximize his own profits. Knowing that this is what the distributor will do, the producer sets his price c in order to maximize his revenue. A. How much will consumers pay for iced tea? B. Now assume that the producer buys the distributor and markets the good directly to the consumers. How much will consumers pay for Ice tea then? C. How much is the producer willing to pay to purchase the distributor?
Transcribed Image Text:= Suppose that the inverse demand curve for iced tea is given by p : 70 12q, where p is the price per bottle paid by consumers and q is the number of bottles purchased by consumers. Iced tea is supplied to consumers by a monopolistic distributor who buys from a monopolistic producer, who is able to produce iced tea at zero cost. The producer charges the distributor a price of c per bottle. Given his marginal cost of c per unit, the distributor chooses an output to maximize his own profits. Knowing that this is what the distributor will do, the producer sets his price c in order to maximize his revenue. A. How much will consumers pay for iced tea? B. Now assume that the producer buys the distributor and markets the good directly to the consumers. How much will consumers pay for Ice tea then? C. How much is the producer willing to pay to purchase the distributor?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS