A market consists of a dominant firm and a number of fringe firms. The followings are the information about these firms. Total market demand: QALL=300 – (2.5) P The competitive fringe supply function (total): QF=2P-12 The dominant firms marginal cost function: MC = 12 + (1⁄2) QD. a) What is the equilibrium price set by the dominant firm? b) How much will the competitive fringe supply to the market at the price found in question (a)? Show the answers graphically.
A market consists of a dominant firm and a number of fringe firms. The followings are the information about these firms. Total market demand: QALL=300 – (2.5) P The competitive fringe supply function (total): QF=2P-12 The dominant firms marginal cost function: MC = 12 + (1⁄2) QD. a) What is the equilibrium price set by the dominant firm? b) How much will the competitive fringe supply to the market at the price found in question (a)? Show the answers graphically.
Chapter11: Profit Maximization
Section: Chapter Questions
Problem 11.15P
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A market consists of a dominant firm and a number of fringe firms. The followings are the information about these firms.
Total market demand: QALL=300 – (2.5) P
The competitive fringe supply function (total): QF=2P-12
The dominant firms marginal cost function: MC = 12 + (1⁄2) QD.
a) What is the
b) How much will the competitive fringe supply to the market at the price found in question (a)?
Show the answers graphically.
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