ECONOMICS --> Socially Optimal Pricing?

Demand for the output of a public project has three distinct phases of equal duration over a demand cycle. If each demand function is stated as if it lasted one entire cycle,

Q1= 2,700 - 100P1

Q2= 1,500 - 100P2

Q3= 800 - 100P3

Short run marginal cost is $3 per unit, while long-run marginal cost is $5 per unit. Both are constant. Capacity output is 1,800 units.

What are the socially optimal prices (P1, P2, P3)? Use a diagram to illustrate your answer.

1 Answer

  • 1 decade ago
    Favorite Answer

    how can we use a diagram in this answering forum ? ?

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