Q 0 0 0 0 0 4000 4000 8000 8000 8000

P 0 100 200 300 350 350 700 700 900 1000

1000

Prices between 0 and 350 350 and 700 700+

Supply curve for joints

1000 900 800 700 600 500 400 300 200 100 0 0 1000 2000 3000 4000 5000 6000 7000

Prices between 0 and 350 350 and 700 700+

Quality of the joints 0 joints are supplied 4000 low quality joints 4000 low quality joints and 4000 high quality joints

8000

9000

Since the consumers cannot distinguish high quality joints from low quality joints their WTP would be the expecte

WTP

650

Since 650 is lower than the reservation price of high quality producers only 4000 low quality joints would be suppl Equilibrium price Equilibrium quantity Profits H firms L firms 650 4,000

0 1,200,000

r WTP would be the expected value from a joint

quality joints would be supplied