Question
Solaris is the sole supplier of solar panels in Sunnylandia . Solaris has no fixed costs and can supply solar panels at a constant marginal
Solaris is the sole supplier of solar panels in Sunnylandia. Solaris has no fixed costs and can supply solar panels at a constant marginal cost MC of $10 per panel. There are two different categories of customers of solar energy, business and residential. The businesses' demand for solar panels is QB(P) = 240 - 3P. The residential demand for solar panels is QR(P) = 80 - 5P.
Suppose that the government legislates that companies are no longer allowed to price-discriminate between the business and residential market customers; thus, the business and residential markets are combined. Show the combined demand using a diagram, then show and calculate the profit maximizing price and number of panels that Solaris will choose to sell in the combined market, as well as the firm's profit .
Which category of customers (i.e., business or residential) benefits from the market being now combined? Justify your answer.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started