16.7 Universal Fur is located in Clyde, Baffin Island, and sells high-quality fur bow ties throughout the world at a price of $5 each. The production function for fur bow ties (4) is given by q= 240x - 2x, where x is the quantity of pelts used each week. Pelts are supplied only by Dan's Trading Post, which obtains them by hiring Eskimo trappers at a rate of $10 per day. Dan's weekly production function for pelts is given by x=1, where I represents the number of days of Eskimo time used each week. 16.8

a. For a quasi-competitive case in which both Universal Fur and Dan's Trading Post act as price takers for pelts, what will be the equilibrium price (p) and how many pelts will be traded?

b. Suppose Dan acts as a monopolist, while Universal Fur continues to be a price taker. What equilibrium will emerge in the pelt market?

c. Suppose Universal Fur acts as a monopsonist but Dan acts as a price taker. What will the equilibrium be?

d. Graph your results, and discuss the type of equilibrium that is likely to emerge in the bilateral monopoly bargaining between Universal Fur and Dan.