Suppose that each person's demand for a project can be expressed as P = 100 - 20Q. Suppose that the firm wants to use two-part pricing. If the firm charges a price of $40 per unit, what is the maximum that the firm can charge in the fixed fee F?

Suppose that each person's demand for a project can be expressed as P = 100 - 20Q. Suppose that the firm wants to use two-part pricing. If the firm charges a price of $40 per unit, what is the maximum that the firm can charge in the fixed fee F?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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I pretty sure I got the first part right. I am struggling with bottom parts.
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Givens: The demand function for spaghetti is given by Qp = 21.6 x (1)0.685 x (Pspaghetri)-0.796 x (Pracos)0.216 x (Pwine)-0.128 where Penaghatti is the price of spaghetti, pracos is the price of tacos, pwine is the price of wine, and I is the income. The supply function for spaghetti is given by 0.494 Qs = 7547.1 x (Pspaghetti - T) x (Peauce)-0.638 x (PLabor)-0.687 where Pspaghetti is the price of spaghetti, Psauce is the price of sauce, PLabor is the wage rate (the price of labor), and T is the tax per unit of spaghetti. Baseline values of variables: DEMAND DATA SUPPLY DATA Income $20,000 Price of sauce $3.00 Price of tacos $6.00 Price of labor $5.00 Price of wine $20.00 Per unit tax $0.00 Questions: With all variables at their baseline values: 1. What's the equilibrium price of spaghetti? 2. What's the equilibrium quantity of spaghetti?