MC of magnets is $0.50 per magnet & MC of producing mugs is $2.00 per mug. Both firms simultaneously choose their quantities. You may assume that both firms aim to maximise profits. a) Calculate the equilibrium price for both products and quantity for both firms. b) Calculate the total producer surplus and deadweight loss. Due to lockdowns and travel restrictions in 2020 and 2021, the number of tourists that visits has significantly dropped. Explain how a drop in tourists will have affected the demand curves. Also, explain the effect on the equilibrium price and quantity and the resulting producer surplus.

MC of magnets is $0.50 per magnet & MC of producing mugs is $2.00 per mug. Both firms simultaneously choose their quantities. You may assume that both firms aim to maximise profits. a) Calculate the equilibrium price for both products and quantity for both firms. b) Calculate the total producer surplus and deadweight loss. Due to lockdowns and travel restrictions in 2020 and 2021, the number of tourists that visits has significantly dropped. Explain how a drop in tourists will have affected the demand curves. Also, explain the effect on the equilibrium price and quantity and the resulting producer surplus.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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