Question
consider an industry with one manufacturer and one retail firm. The manufacturer produces a good at a marginal cost of 10. THe retailer buys the
consider an industry with one manufacturer and one retail firm. The manufacturer produces a good at a marginal cost of 10. THe retailer buys the product from the manufacturer at a linear wholesale price w. the retailer then sells the product at a price p to final consumers. Total demand in the industry is given by D(p)=50-p
Which is correct?
THe equilibrium wholesale price is w=10 and the retail price is p=30
THe equilibrium wholesale price is w=20 and the retail price is p=30
THe equilibrium wholesale price is w=10 and the retail price is p=20
THe equilibrium wholesale price is w=30 and the retail price is p=40
None
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