Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A consumer has inverse demand of p=10-0.5q fora good and the market price is $2.00. Calculate consumer surplus and the total value ofthe good for

image text in transcribedimage text in transcribed
A consumer has inverse demand of p=10-0.5q fora good and the market price is $2.00. Calculate consumer surplus and the total value ofthe good for the corresponding quantity consumed. Consumer surplus is $ . (Enter your response rounded to two decimal places.) The total value is $ , (Enter your response rounded to M0 decimal places) Two restuarants in Bruges, Belgium-Oud Brugge and Den Dijver-engage in price competition. Oud Brugge is located on the central town square, which is the main tourist area. Den Dijver, located on a small side street, is recognized among beer lovers as being one of Belgium's top beer restaurants. Two types of diners patronize these restaurants: beer lovers, who are well-informed about both restaurants, and tourists, who know about Oud Brugge and may or may not know about Den Dijver. Suppose there are 100 beer lovers and 100 tourists. Beer lovers will not eat at Oud Brugge, and their demand function for meals at Den Dijver is DD > 100(1 - 0.02PDD). The tourists' demand function for Oud Brugge is QOB > n(0.333333333 - 0.04POB + 0.02PDD) + (100 -n)(1 - 0.02PDD). where n is the number of tourists who know about both restaurants. The tourists' demand function for Den Dijver is Q DD = n(0.666666667 - 0.02PDD + 0.01POB). The marginal cost of a meal at Den Dijver is 15 and the marginal cost of a meal at Oud Brugge is 20. Oud Brugge and Den Dijver simultaneously set prices. What is the Nash equilibrium in prices as a function of n? The Nash equilibrium is PDD = and POB = . (Round all numbers to exactly three decimal places.) (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the ^ character.) If n = 0, what is the Nash equilibrium in prices? The Nash equilibrium is for Den Dijver to charge $ and for Oud Brugge to charge $ If n = 100, what is the Nash equilibrium? The Nash equilibrium is for Den Dijver to charge $ and Oud Brugge to charge $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Dynamic Business Law The Essentials

Authors: Nancy Kubasek

1st Edition

0073377686, 9780073377681

More Books

Students also viewed these Economics questions