Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The residents of New Asgard, consume bottles of asgardian ale according to the demand function D(p) = 2, 000 p. Here D(p) is the demand

image text in transcribed
The residents of New Asgard, consume bottles of asgardian ale according to the demand function D(p) = 2, 000 p. Here D(p) is the demand per year for bottles of asgardian ale if the price per bottle is p. The sole distributor of asgardian ale in New Asgard, Hammer Up, purchases asgardian ale at 0 per bottle from their supplier Ordin's Beerd. Ordin's Beerd is the only supplier of asgardian ale in the area and behaves as a prot-maximizing monopolist. For simplicity we suppose that it has zero costs of production. In a summary, the asgardian ale is made by the only supplier Ordin's Beerd then sold to the sole distributor Hammer Up who then sell the beer to the residents of New Asgard. (a) What is the equilibrium price charged by the distributor Hammer Up? What is the equilibrium quantity sold by Hammer Up? (You should write equilibirum price and quantity in terms of the cost c) (b) What is the equilibrium price c charged by the producer Ordin's Beerd? What is the equilibrium quantity sold by Ordin's Beerd? (c) What are the prots of Hammer Up? And what are the prots of Ordin's Beerd? What's consumer's surplus in this market? (d) Suppose Ordin's Beerd purchase Hammer Up outright, these two companies merge to a new rm. That will be the new equilibrium price and quantity for asgardian ale? What's the prot of the new merged rm? (e)What's the consumer's surplus after merge? How does this compare with the previous level of consumers' surplus

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Marketing

Authors: John McMurry, Robert Fay

13th Edition

125973806X, 9781259738067

More Books

Students also viewed these Economics questions

Question

How does the government intend to simplify the banking system?

Answered: 1 week ago

Question

Is financial support available for travel to conferences?

Answered: 1 week ago

Question

6. How can hidden knowledge guide our actions?

Answered: 1 week ago

Question

7. How can the models we use have a detrimental effect on others?

Answered: 1 week ago