1. there are two companies (company 1 and company 2) that operate in a market where both firms produce a homogenous item. The two companies sell the item in a market where the demand function is given by: Q = 22 – 0.50P. Now if Q < 11 Q = 0, if Q > 11 where Q = q1 + q2 is the total market output and qa is company a's output, a = 1,2. company s's cost function is: Ca (qa)= 4qa. Assume the two companies can now collaborate and act as a single monopoly firm. Calculate that the market price that each company pays, EQM quantities each company sells, the profits that each company makes. i)

1. there are two companies (company 1 and company 2) that operate in a market where both firms produce a homogenous item. The two companies sell the item in a market where the demand function is given by: Q = 22 – 0.50P. Now if Q < 11 Q = 0, if Q > 11 where Q = q1 + q2 is the total market output and qa is company a's output, a = 1,2. company s's cost function is: Ca (qa)= 4qa. Assume the two companies can now collaborate and act as a single monopoly firm. Calculate that the market price that each company pays, EQM quantities each company sells, the profits that each company makes. i)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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