Question

< 2 > . #5 0 – 1. Suppose that the market for Airbnb listings is perfectly competitive with demand below denoted by D. Supply in this market is broken down into two groups: sharing suppliers with supply curve Sg and investment suppliers (multi-listing hosts) that only enter if the equilibrium price is sufficiently high so that the supply curve becomes S8+, with investors (a) (5 points) In the graph below, use a dotted line to denote the equilibrium price without investment suppliers. Denote this price with Ps. (b) (5 points) In the graph below, use a dotted line to denote the minimum price required for investment suppliers to participate. Denote this price with P. (c) (5 points) Do investment suppliers enter into the market? (d) (5 points) If you said investment suppliers enter, then use a dotted line to denote the equilibrium price with investment suppliers. "If not, then use a dotted line to denote the equilibrium price without investment suppliers. Denote this price with p. 8 0 -

Answer 1

c) Ar price P, the supply curve dinenges into two. Box The output connesponding to P is the break - even outpert, of To tura pe Any outper prod attrait less supplieve to its right of P. Any output produse altraits to work suppivp.