Problem
The Smith School is distributing Blackberry devices to full-time MBA students and faculty. The marginal cost of providing a Blackberry is $200. There were two different demand curves, one for faculty and one for students. They are: Qfaculty=100- P 5, and Qstudents=300-P. When students receive Blackberries, the faculty demand curve shifts up by $50. When faculty receive Blackberries, the student demand curve shifts up by $50.
1) What is the quantity of Blackberries that maximizes social welfare if Blackberries are distributed to students and not to faculty?
2) What is the quantity of Blackberries that maximizes social welfare if Blackberries are distributed to faculty and not to students?
3) What is the quantity of Blackberries that maximizes social welfare if Blackberries are distributed to faculty and students?