Question
MacLtd.isamonopolyintheproductionoftennisshoesinthetownofFreeCompete.Themarginalcostofproducingshoesis$18.MacLtd.,however,doesnot havethe facilitiesforsellingtheshoestoconsumers,soitsellsthemwholesaletoafirmthat,in turn,sellstheshoestoconsumersinamonopolyretailmarket.Thecostsforselling shoesfacedbytheretailfirmincludethewholesalepriceoftheshoes(PW)andthe marginalretailcostsof$10.TheconsumerdemandfortennisshoesinFreeCompeteisgiven by P = 100 -Q. What are the wholesale and retail prices of tennis shoes? What are the profits
MacLtd.isamonopolyintheproductionoftennisshoesinthetownofFreeCompete.Themarginalcostofproducingshoesis$18.MacLtd.,however,doesnot havethe facilitiesforsellingtheshoestoconsumers,soitsellsthemwholesaletoafirmthat,in
turn,sellstheshoestoconsumersinamonopolyretailmarket.Thecostsforselling shoesfacedbytheretailfirmincludethewholesalepriceoftheshoes(PW)andthe marginalretailcostsof$10.TheconsumerdemandfortennisshoesinFreeCompeteisgiven by P = 100 -Q.
What are the wholesale and retail prices of tennis shoes? What are the profits earn by Mac Ltd. and the retail firm?
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