A market has many small firms and one dominant firm. The market demand is Q = 100 - 5P. The dominant firm has a constant marginal cost of $6. All the smaller fringe firmscombined have a supply curve given by Qe = 4P -8.The dominant firm sets the market price, and the fringe firms act as price takers. The dominant firm allows the fringe firms to sell as many units as they want at the price set bythe dominant firm. The rest of the market is then supplied by the dominant firm.units, and the price it charges is $(Enter your responses as integers.)The profit-maximizing quantity produced by the dominant firm is

Answered: Image /qna-images/answer/fbe001b1-8c6c-4630-bcf2-b5cc82a47896.jpg

Answered: A market has many small firms and one…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter9: Market Structure And Long-run Equilibrium

Section: Chapter Questions

Problem 2MC

See similar textbooks

Similar questions

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? ANSWER: P= 55.82          b) Calculate the total market demand at the price found in question 2(a). ANSWER: QALL= 160.45 c) How much will the dominant firm supply to the market at the price found in question 2(a)?
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) Calculate the total market demand 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) Calculate the total market demand at the price found in question (a). c) How much will the competitive fringe supply to the market at the price found in question (a)?                                                                               d) How much will the dominant firm 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. What is the equilibrium price set by the dominant firm? Calculate the total market demand at the price found in question 2(a). How much will the competitive fringe supply to the market at the price found in question 2(a)? How much will the dominant firm supply to the market at the price found in question 2(a)? 5. Show the above 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 dominant firm 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.
The cost function of the fringe firms is TC(q) = 4q, their total capacity is K = 2 units. The dominant firm has TC(q) = q. The market demand is Q(P) = 20 – 2P. What is the fringe supply? What is the profit maximizing price for the dominant firm? with expl plz
Suppose Firm X is a dominant firm in a market where the market demand is Q = 1200 -2p. Once Firm X sets its price, those small competitors set their prices a little lower so that they can always sell up to their capacity. Assume the small firms’ combined capacity is 100 units. Further assume Firm X’s marginal cost is 50. Answer the following questions. Let Q^D be the quantity produced by the dominant firm. Write down the residual demand function faced by Firm X. (Hint: Think about how Q and Q^D are related.) Find Firm X’s profit-maximizing price.
The average avoidable cost for a fringe firm is AAC(q) = 20/q +5q. The marginal cost function for a fringe firm is MC = 10q. There are 10 fringe firms. The marginal cost of the dominant firm is 2 and the demand function is Q = 100 − P. What is the supply function of the fringe? What is p0, the minimum price at which the fringe will supply? What is the residual demand function for the dominant firm? What is the profit-maximizing price of the dominant firm? Compare monopoly profits to the profits of the dominant firm. Which market structure is socially preferable, dominant firm or monopoly? Why?
Suppose that there are two types of firms in a perfectly competitive market. Firms of type A have costs given by CA(q) = 30q2 + 10q. Firms of type B have costs given by CB(q) = 50q2 + 10. ( dCA dq = 60q + 10 and dCB dq = 100q). There are 60 firms of type A and 100 firms of type B. Derive the individual firm supply functions for each type of firm and What is the range of prices in which some firms produce but others do not? Are there prices at which no firms produce Why?
A firm produces output, measured by Q, which is sold in a market in which the price P = 20, regardless of the size of Q. The output is produced using only one input, labor (measured by L); the production function is Q(L) = L. There are many suppliers of labor, and the supply schedule is w = 2L, where w is the wage rate. The firm is a monopsonist in the labor market. What wage rate will the monopsonist pay? How much extra profit does the firm earn when it pays labor as a monopsonist instead of paying the wage rate that would be observed in a perfectly competitive
In a monopoly market, you have an inverse demand function P=a-bQ, where Q is total market production and a and b are positive constants. Assume marginal costs of production are a positive constant c. Obtain the marginal revenue of this firm. Explain why it is different from that of a perfectly competitive firm. Calculate the lump sum tax which would induce this monopoly firm to exit the market. Calculate the incentive this monopoly would have to invest in a process innovation. Assume this monopoly has found a way to divide their consumer base into two identifiable groups. Discuss the impact this would have on the prices consumers pay.

SEE MORE QUESTIONS

Recommended textbooks for you

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS