Question
Consider a market where the demand for the good is given by Q=732-4p, where Q denotes the quantity demanded at price p. On the supply
Consider a market where the demand for the good is given by Q=732-4p, where Q denotes the quantity demanded at price p. On the supply side, the industry supply function is given by Q=-10+5p. There is a single intermediary between the two sides: a firm which buys the good from the suppliers and then sells it to consumers. The intermediary's aim is to maximize its own profit.
Find the equilibrium assuming for simplicity that the intermediary's operating cost is zero.
Then calculate and enter below the efficiency loss due to this market arrangement.
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