Question 4 The Downstream Sunglass Company has a monopoly on sunglasses. The inverse demand for sunglasses is given by:

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Question 4 The Downstream Sunglass Company Has A Monopoly On Sunglasses The Inverse Demand For Sunglasses Is Given By 1 (44.44 KiB) Viewed 27 times

Question 4 The Downstream Sunglass Company has a monopoly on sunglasses. The inverse demand for sunglasses is given by: pD = 60 - OP The firm needs to 1 unit of tinted glass for every pair of sunglasses it produces. It has a marginal cost is equal to the price of the input (tinted lenses): MC =p (a) Write down the marginal revenue function (MR) for the downstream firm. (b) Write down the downstream firm's profit maximizing quantity of sunglasses, as a function of P! This function tells you the downstream firm's demand for tinted glass. The Upstream Glass Tinting Company has a monopoly on the manufacture of tinted lenses. It also has a constant marginal cost: MC) = 2 This company only sells to one customer: Downstream Sunglass Company. (c) Based on the downstream firm's demand, write down the marginal revenue function (MR2) for the upstream firm. (d) Solve for profit-maximizing price of tinted class pl* that the upstream firm will charge.