Producer surplus in the US increases, and consumer surplus in the US decreases.

Question

Producer surplus in the US increases, and consumer surplus in the US decreases. d. Scenario BRTD. Two firms, A and B, each produce the same product at AC. MC 1. They each set prices: Pa and PB. Prices can be anywhere between S1 and $51. If PA PB, consumers buy 10 units from the low-price firm, and 0 from the high-price firm. If P- PB, consumers buy 5 from each firm. The payoffs are the profits of each firm. See Scenario BRTD. How much profit does each firm receive if both firms charge $21 per unit. a. $100 b. 0 c. $400 d. $200 18. 0

Explanation / Answer

Answer:- As both the firms are charging $21, thus the consumer will buy 5 units from each firm. (it is stated in the question that if both the firms charge similar price, 5 units will be bought)

Average cost = $1

Profit = Price –cost = $21-$1 =$20

So total profit per firm =$20*5 =$100

So the correct answer is $100

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.