There is a beer company and a bottling plant. The beer company can make 100 gallons of beer for $200. Note that 1 gallon is enough for 16 8-ounce cans. A canning company can can 1600 cans of beer for a cost of $0.25 each (including transportation costs). Canning services can be bought and sold on the open market for $0.50 per can. A can of beer sells for $1. A. Find the outside option profit for each firm Now imagine that the canning company can move near the beer company for $100. Doing this will decrease the cost off canning to $0.10 per can.Ex Ante B. What is the maximum total profit generated by both firms working to-gether? C. Find the nash bargaining profit for each firm.Ex PostNow assume that the canning company has moved. They can still sell theircanning services on the open market and doing so will still cost $0.25 per can.

There is a beer company and a bottling plant. The beer company can make 100 gallons of beer for $200. Note that 1 gallon is enough for 16 8-ounce cans. A canning company can can 1600 cans of beer for a cost of $0.25 each (including transportation costs). Canning services can be bought and sold on the open market for $0.50 per can. A can of beer sells for $1. A. Find the outside option profit for each firm Now imagine that the canning company can move near the beer company for $100. Doing this will decrease the cost off canning to $0.10 per can.Ex Ante B. What is the maximum total profit generated by both firms working to-gether? C. Find the nash bargaining profit for each firm.Ex PostNow assume that the canning company has moved. They can still sell theircanning services on the open market and doing so will still cost $0.25 per can.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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