ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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[please show all steps thanks!] A food
product is either organic or non-organic
and the consumers can't tell them apart.
Consumers WTP (willingness to pay) for an
organic product is 100, while for a non-
organic product the WTP is 30. Sellers who
produce organic products are willing to sell
if the price is above 70, and the sellers who
produce non-organic products are willing
to sell their product if the price is above 20.
What is the minimal q (the share of organic
products in the market) for which a pooling
equilibrium exists?
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Transcribed Image Text:[please show all steps thanks!] A food product is either organic or non-organic and the consumers can't tell them apart. Consumers WTP (willingness to pay) for an organic product is 100, while for a non- organic product the WTP is 30. Sellers who produce organic products are willing to sell if the price is above 70, and the sellers who produce non-organic products are willing to sell their product if the price is above 20. What is the minimal q (the share of organic products in the market) for which a pooling equilibrium exists?
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