Question

In: Economics

Milky Moo and Mega Cow are the only sellers of milk. Milky Moo's supply function is...

Milky Moo and Mega Cow are the only sellers of milk. Milky Moo's supply function is QsMMoo = 12P - 6 at prices above $0.50 and zero at prices below $0.50. Mega Cow's supply function is QsMCow = 9P - 3 at prices above $0.33 and zero at prices below $0.33. At a price of $0.45:

a)Milky Moo is the only supplier of milk.

b)Mega Cow is the only supplier of milk.

c)both Milky Moo and Mega Cow supply milk.

d)neither Milky Moo nor Mega Cow supply milk.

Solutions

Expert Solution

Option

b)Mega Cow is the only supplier of milk.

==

Milky Moo's minimum acceptable price is $0.5 and the given price is below it so the firm will not supply.

Mega Cow's minimum willingness to pay is $0.33 and the price is $0.45 so the firm will supply at the price.

In total, one supplier is there and that is Mega Cow.

Rahul Sunny answered 2 years ago
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