Business, 25.11.2021 08:00 hailey200127
The residents of Flint, Michigan, consume clean water according to the demand function D(p) = 1000 - p, where p is a price of a bottle of clean water and D (p) is the number of bottles per year. The only distributor of the clean water in Flint is Clean Water Inc., which purchases water from H2O Ltd. at c dollars per bottle. The company H2O Ltd. is the only supplier of clean water in the area and acts as a profit-maximizing monopolist. Assume that the cost of production of clean water for H2O Ltd. is zero.
(a) What is the equilibrium price per water bottle charged by Clean Water Inc.?
(b) What is the equilibrium quantity sold by Clean Water Inc.?
(c) What is the equilibrium price per water bottle charged by H:0 Ltd. (find c)?
(d) What is the equilibrium quantity of water bottles supplied by H, Ltd.?
(e) What are the profits of Clean Water, Inc.?
(g) What is the consumer's surplus generated in the market?
(h) What are the profits of H. Ltd.?
(i) Suppose H, O acquires Clean Water, Inc. What would be the new equilibrium price and quantity of water bottles?
(j) What are the profits of the new integrated firm?
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The residents of Flint, Michigan, consume clean water according to the demand function D(p) = 1000 -...
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