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In Terminal A at Sacramento airport, Peet's has a virtual monopoly on the sale of coffee past the point of security. Inverse demand for coffee
In Terminal A at Sacramento airport, Peet's has a virtual monopoly on the sale of coffee past the point of security. Inverse demand for coffee in Terminal A is given by p(q) = 21 0.1q. Their cost function is given by C(q) = 1q + 1000 where the fixed cost is what Peet's pays Sacramento airport in rent.
- How do we plot the demand for coffee? How do I get the equilibrium price and quantity?
- How do i comment on the welfare effects of having monopolist from the graph? (do I just talk about CS and PS and DWL?)
- who is the ultimate recipient of these monopoly rent?
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