Answer to Question #220397 in Microeconomics for Taylor Guidry

Question

Supposed Sam is the only seller in the market for bottled water and Lorenzo is the only buyer the following list shows the value Lorenzo places on a bottle of water in the car Sam incurs to produce each bottle of water

Answer 1

In this case, Sam acts as an monopoly within the respective region. He is the one to determine the price to present to his buyers in the respective period. There is no any competition to prevent such situation. However, Lorenzo being the only buyer the two must come in an agreement to present prices that favor both parties.