This company is subject to price-cap regulation also must, Ask an Expert

Economics

find out the price, total revenue, profit, demand curve.

A firm that provides two goods faces the following demands:

P1 = 8 - .02Q1

P2 = 15 - .03Q2

All costs are fixed at $900 and prices in the last period were P1 = $3 and P2 = $8.

This company is subject to price-cap regulation also must choose prices for the next time period. Suppose a price-cap formula that is very simple, where regulators allow any price-quantity combination such that the prices in the next period will yield no more revenue than in the previous period given the quantities produced in the previous period. Derive the price constraint for P1 in terms of P2 for setting next period's prices.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M918377

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