Question
I have 2 questions below I don't recall asking for help but I can someone please review and advise? 3.[Imperfect Competition - Coffee] Dunkin' and
I have 2 questions below I don't recall asking for help but I can someone please review and advise?
3.[Imperfect Competition - Coffee] Dunkin' and Starbucks are competing for young minds during Finals Week.They face a market demand of P=80-Q.The marginal cost of coffee is $2 .
a.[12points][Cournot Competition]Suppose Dunkin' and Starbucks compete in quantities.Calculate the equilibrium quantity for each firm, and the market price.
b.[Monopolistic Competition]Seeing the profits of Dunkin' and Starbucks, more firms enter the market, each paying $100 in fixed coststo deliver their own "unique" flavor.The coffee market becomes saturated.Answer the following:
i.What happens tothe firms'profitsin the long run?
ii.Is the price higher or equal to marginal cost?
4.[Price Discrimination - Restaurants and Grocery Stores] In the case of Buffalo Wild Wings (B-Dubs), their sauces may be purchased at a grocery store, or at their restaurant location. Grocery Store consumers' demand is P=100-10Q, whereas dine-in eaters' demand is 200-5Q.
a.[6 points]Determine the price B-Dubsshould charge at each location for its bottled sauce.
b. Because of concerns, restaurants no longer offer dine-in options. What will happen to the profit-maximizing price at the grocery store during the pandemic? (do not use numbers)
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