Question
The annual inverse demand for Coca-Cola is given by = 4 .02, where is measured in dollars per one liter and is measured in millions
The annual inverse demand for Coca-Cola is given by = 4 .02, where is measured in dollars per one liter and is measured in millions of liters. The marginal cost of production in Coca-Cola's original factory is given by 1 = 1 + 0.011.
a. What would be the price per liter and the quantity sold in equilibrium, if Coca-Cola acted like a perfectly-competitive firm? What would be the producer surplus?
b. As a monopolist, how many liters does Coca-Cola sell? At which price? What is the producer surplus then?
c. If Coca-Cola, as a monopolist, can also benefit from production at its second factory, where the marginal cost of production is given by 2 = 0.2 + 0.022, what would be the quantity it sells in equilibrium? What is the price per liter? How many liters are produced in its first plant (1) and how many in its second plant (2)? d. Using just the second factory for production (2 = 0.2 + 0.022), Coca-Cola gets access to another market, where the demand for its product is given by 2 = 2 0.012. d1. What will be the quantity sold in each market, and the unit price if Coca-Cola must charge the same price in all markets? d2. What will be the quantity sold and the price in each market, if Coca-Cola can pricediscriminate?
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