A two-firm cartel producing industrial diamonds faces the following demand function: Q=120-10P The total cost function of each firm is TC1 = 4Q1 + 0.1Q12 and TC2 = 2Q2 + 0.1Q22 a, Find the output and profit of each firm and total profit of cartel that maximize total profits b, Find the output and profit of each firm and total profit of cartel that maximize total revenues
Q: Distinguish between GDP deflator and Consumer Price Index
A: GDP deflator and Consumer Price Index (CPI) are used to determine price inflation and reflect the…
Q: Two companies, Klaren Electronics, a monopoly, and the Yarn Barn, a perfectly competitive firm, are…
A: Monopoly Market: The monopoly market is the market where a single seller or firm dominates the…
Q: uppose you own two Domino's Pizza franchises in your town. After reading the latest issue of Pizza…
A: Price elasticity of demand is an estimation of the adjustment of the utilization of an item…
Q: Do you think a tutoring business sells a relatively elastic or inelastic product/service? Mention…
A: Elasticity is a term used in economics to describe how a good or service's total quantity demanded…
Q: Please identify each of the following the statements as true/false/uncertain and support your claim…
A: Nominal interest rate It is that rate in which is the real interest rate and inflation. Thus…
Q: Is the way that NBER measures a recession fair and accurate? Please explain
A: A chronology of US business cycles is kept up to date by the NBER's Business Cycle Dating Committee.…
Q: Macroeconomics Question 1) Given the following: Money supply is 1400, C = 120+0.7(Y-T). I = 200 –…
A: Introduction According to Keynes analysis, economy is in equilibrium if goods market will be in…
Q: 2. () Budget line 1: Wages are $12 per hour. No income tax. Draw budget line 1. (ii) Budget line 2:…
A: Utility maximizing condition is MUr / w = MUcWhere MUr = Marginal utility from leisure,w = Wage…
Q: Consider an economy described by the following: a. Derive expressions for the MP curve and the AD…
A:
Q: Start from the equilibrium in the money market in which all the usual assumptions hold. Then the…
A: Money market equilibrium happens at the financing cost at which the amount of money requested…
Q: Suppose the demand function of a product is given by q = 14-5/p. 1 1, the demand is elastic, and…
A: Demand Function is the equation that shows how the quantity of a good demanded by the consumers in a…
Q: Choose the correct statement: Select one: a.There is a negative relationship between the price level…
A: The measure that depicts quantities of goods and services demanded at various levels of price is…
Q: Rikell company produces helmets using labor (L) and capital (K). Its production function is given by…
A: Complementary goods are consumed together in fixed proportion
Q: The central bank of the United States of America is called U.S. Treasury First National…
A: Central Bank is the most important bank of the economy. It aims at providing stable and efficient…
Q: 8. Difference in Differences Question: In the context of a Difference-in-Differences estimation,…
A: 8. Estimating the impacts of a rapid shift in the economic climate, a policy, or general treatment…
Q: owing market is a duopoly populated only by the companies Alpha and Beta. They produce and sell…
A: Duopoly is a special form of the oligopoly market where only two firms exist in the market. The…
Q: . What is the total gain in apparel and chemical output that would result from such specialization?…
A: Opportunity costs address the potential advantages that an individual, investor, or business passes…
Q: The demand function for your product is: Q(P) = 1478-22P where P is price Assuming that P=$50…
A: Given Q = 1478 – 22P Where P = 50 $ At price of 50 $ demand = 1478 – 22(50) = 378 units
Q: The group within the Federal Reserve that ultimatly decides on monetary policy and interest rate…
A: The Federal Reserve System is the national bank and monetary power of the United States. The Federal…
Q: If the consumer's income increases: O a the budget constraint shifts out and its slope does not…
A: NOTE: Handwritten questions are not allowed as per Bartleby Guidelines. The consumer Income…
Q: An engineer who is about to retire has accumulated $50,000 in a savings account that pays 6% per…
A: Present amount accumulated = 50,000 $ Interest rate = 6 % compounded annually Time = 10 years
Q: The short-run and long-run average cost functions of a firm are generally U-shaped. This implies…
A: The factors of production are the elements employed in the production process by the enterprise in…
Q: A few years ago in Northern California wildfires destroyed many vineyards. The market for wine was…
A: Demand is the market's willingness to buy the item or service, while supply is the market's capacity…
Q: Choose the correct statement: Select one: a.There is a negative relationship between the price level…
A: Aggregate demand refers to the ability of the people to pay for the consumption of goods and…
Q: MP and MRP and Profit-Maximization Questions: If tacos sell for $2.50, and wage=$12.50, answer…
A: Given information Selling price=$2.50 W=$12.50 Given table
Q: What are the factors that will affect the total revenue?justify your answer
A: Total revenue is the total amount of money a company brings in from selling its goods and services.…
Q: A monopolist can produce at a constant average (and marginal) cost of AC = MC = $5. It faces a…
A: Given the marginal cost = $5 Average cost = $5 Demand curve, Q = 53 - P
Q: Question 12 Under which of the following two scenarios would demand be more elastic? Explain. (a)…
A: The difference between the relative change in the quantity demanded of a good and the relative…
Q: tuey the VP for advertising at the Meg-low Mart is trying to sell Meg-Low Mart Body Spray for $1.99…
A: Following is the given information: Given the selling price of Spray = $1.99 per unit Variable cost…
Q: 2. You were asked by your boss to compare the concentration of two different markets, market A and…
A: Given, c6A=0.50c7B=0.40
Q: 4. (If P = 2 and Y= 1000, then which of the following pairs of values are possible? A. M = $500, V =…
A: From the quantity theory of money The equation of exchange is MV= PY Where M is money supply, V is…
Q: 1.Explain the role of government in social responsibility in terms of how governments and businesses…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: indicate whether you think the statement is true or false and explain why. 9. Natural gas and coal…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: economist view a perfectly competitive market structure as the ideal structure for economic…
A: According to economic theory, perfect competition exists when all businesses sell the same goods,…
Q: Identify the consequences of not planning following a business analysis approach to implement at a…
A: Business analysis approach Firms who are able to see new possibilities and adapt to them are more…
Q: Are carbon prices working? Economists say that raising the cost of burning coal, oil, and gas is a…
A: The cost of missed opportunities is the benefit that might have been obtained from an alternative…
Q: (1) The ABC Corporation is the only producer of a particular type of laser. The demand curve for its…
A: "Monopoly is a market structure in which there is only one seller or one producer selling the…
Q: The PPF curve shows a curved, egative relationship between two ods. This means that an increase in e…
A: PPF shows the different combinations of two goods that can be produced with available resources. All…
Q: 4. Measuring GDP The following table shows data on consumption, investments, exports, imports, and…
A: The market value of all finished products and services produced in a nation over a specific time…
Q: (Problems 27 to 29) Use the benefit-cost method to determine which of the alternative bridges below…
A: Hi! Thank you for the question. As per the honor code, We’ll answer the first question since the…
Q: If the consumer's income increases: O a. the budget constraint shifts out and its slope does not…
A: Note: we as full-time experts are not allowed to provide handwritten solutions. You must have seen…
Q: Suppose the demand function of a product is given by q = 14-5/p.1 1, the demand is elastic, and the…
A: Demand function : q = 14 - 5p31<p<10 p = 8
Q: Discuss the concept of stationarity. What is the difference between strong and weak stationarity?…
A: Stationarity is a process of Time series and is used in regression to analyze the stationarity of…
Q: What is Cost of Living Adjustments. Why do we need to consider
A: In economics matters, inflation is a general expansion in the costs of labor and products in an…
Q: Macaroni and cheese are complements, when the price of macaroni goes up, the demand curve for…
A: Two goods are complements when they are consumed together.
Q: Economics Question
A: Market is in equilibrium where demand and supply are equal and their intersect set the price and…
Q: Consider a market for Ice Cream an inferior good in Pakistan. For each of the given events, identify…
A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…
Q: Assuming that policy makers determine that a 500 billion increase in AD is needed to stabalize the…
A: There is a need to increase the AD by 500 billion to stabilize the economy. => change in AD =…
Q: R4
A: The labor union can be referred to as an organization or union labor that is engaged in collective…
Q: How is the AS-AD model of short-run and long-run effects on the price level and inflation when there…
A: Goods market is in equilibrium where AD and AS are equal . full employment level means economy is…
A two-firm cartel producing industrial diamonds faces the following demand function:
Q=120-10P
The total cost function of each firm is
TC1 = 4Q1 + 0.1Q12 and TC2 = 2Q2 + 0.1Q22
a, Find the output and profit of each firm and total profit of cartel that maximize total profits
b, Find the output and profit of each firm and total profit of cartel that maximize total revenues
Step by step
Solved in 4 steps with 2 images
- Suppose that four firms have agreed to operate as a cartel in order to maximize joint profit. The cartel will operate with the following inverse demand function and total cost function where Q is the market output and P is the market price in dollars. P = 4,000 – 2Q Inverse Demand Function TC = 800Q Total Cost Function Determine the market price and the market output set by the cartel. Determine the profit earned by each firm if they share the market equally.Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P= 200-Qa-Qb where QAQA and QBQB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCa=1,500+55Qa+Qa2 TCb=1,200+20Qb+2Qb2 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at $ . Similarly, Company B will produce units and sell at $ . At the optimum output levels, Company A earns total profits of $ and the marginal cost of Company B earns total profits of $ . Therefore, the total industry profits are $ . At the optimum output levels, the marginal cost of Company A is $ and the marginal…Producers in three countries have formed a cartel to sell a highly-priced product. Suppose the world demand for the product is consistent with the equation: P=80-0.005QT NB: QT is the total cartel sales. The producers have managed to maximise profit at a price of R70 per unit. Suppose the members have the following total cost functions; Member 1: TC=7382 + 10Q + 0.05Q2 Member 2: TC= 9374 + 20Q + 0.02Q2 Member 3: TC=7432 + 30Q + 0.03Q2 : Derive: a) Marginal revenue b) Output of member 1,2 and 3 c) Total cartel output.
- Suppose that two identical firms produce widgets and that they are the only firms in the market. The average and marginal cost is €6 for each firm. Price is determined by the following demand curve: P = 30 – Q where Q = Q1 + Q2. Suppose the two firms combine together and form a cartel. The output produced by each firm in the cartel is (assuming that they split the cartel output equally between them) A. 6 B. 12 C. 8 D. 4 Two identical firms compete in a market to sell a homogenous good with the following inverse demand function: P = 600 – 3Q. Each firm produces at a constant marginal cost of €300 and there are no fixed costs. The price that each firm in the Cournot equilibrium will charge is A. 400 B. 500 C. 300 D. 450Consider an industry with two firms, each having marginal costs and total costs equal to zero. The industry demand is P = 100 − Q where Q = Q1 + Q2 is total output. 1. Find the cartel output and cartel profits assuming that the firms share the profit equally. In cartels, firms behave as if they are a monopoly. Hence, the cartel quantity is at the point where MR = MC. After finding the quantity, use the demand curve to find the cartel price. And then calculate Π = T R − T C. Divide the total profit by 2 to find each firm's profit. 2. If each firm behaves as a Cournot competitor, what is firm 1's optimal output given firm 2's output? This part is asking the best response function of firm 1. Solve firm 1's profit maximizatin problem by setting its MC = MR. Then, express Q1 as a function of Q2. 3. Calculate the Cournot equilibrium output and profit for each firm. You have already solved firm 1's problem above. Now solve firm 2's problem. Then, solve BR functions simultaneously to get…Two farmers produce milk for local town with local milk demand given by Q=100-1/3P (P denotes price measured in Rands, Q denotes the quantity measured in litres). Both farmers have the same cost function given by TC=150+2q (where q denotes output) a. Suppose that both farmers decide to form a cartel, determine profits for each farmer under the cartel
- Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P=200− Q A − Q B where Q A and Q B are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TC A =1,500+55 Q A + Q A 2 TC B =1,200+20 Q B +2 Q B 2 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at . Similarly, Company B will produce units and sell at . At the optimum output levels, Company A earns total profits of and Company B earns total profits of . Therefore, the total industry profits are . At the optimum output levels, the marginal cost of Company A is and the marginal cost of Company B is . The following table shows the long-run equilibrium if the firms act independently, as in the Cournot model…Two farmers produce milk for local town with local milk demand given by Q=100-1/3P (P denotes price measured in Rands, Q denotes the quantity measured in litres). Both farmers have the same cost function given by TC=150+2q (where q denotes output) a. Calculate the profit if farmer 2 decides to break the cartel agreementConsider an industry that consists of 4 firms, all competing over the same market, given by the following demand equation: P=80-3Q All firms have the same Total Cost Function, given by: TC₁=10q,+2q Suppose the firms decide to collude and voluntarily restrict output and raise price, in order to increase profits. a) What price will be charged by the members of the cartel? Assume the head of the cartel is fair and distributes output q, equally among the 4 firms (since they have identical costs). b)What is the output of each individual firm? c) What is each individual firm's profit? We know that there is a built-in incentive for cartel members to cheat on the cartel. If, as a result, the cartel breaks down: d) What price will be charged in the market? e) Assuming each firm captures an equal share of the market, what now is each firm's output, q? f) What now is individual firm profit? g) Illustrate your answer
- Assume the management of two large firms selling canned vegetables hold a secret meeting to create a collusive cartel. Which will most likely be the outcome of that meeting, assuming both companies engage in the collusion? soda output will fall and market prices will fall market price will remain unchanged and total output will fall soda output will fall and market prices will rise soda output will rise and market prices will fall soda output will rise and market prices will riseThere are two firms in the blastopheme industry. The demand curve for blastophemes is given by p=2100-3q. Each firm has one manufacturing plant and each firm i has a cost function C(qi)=qi2 , where qi is the output of firm i. The two firms from a cartel and arrange to split total industry profits equally. Under this cartel arrangement, what will they do if they want to maximize joint profits?.Consider an industry with two firms, each having marginal costs and total costs equal to zero. The industry demand is P = 100 − Q where Q = Q1 + Q2 is total output. 4. If the firms interact only once, is there a profitable deviation (cheating) from cartel for any firm? Find the profit of the firms in case of cheating. If a firm deviates from cartel (cheats) it will play its profit maximizing quantity, which is the quantity on its best response function. Now, use the best response function of firm 1 to find firm 1's cheating quantity, when firm 2 follows the rules of the cartel. Use the demand curve to find the new price level and then calculate profits. 5. Design a 2x2 normal form payoff matrix with strategies cartel and cheat. Complete the payoffs using the profits you calculated in the previous parts. Firm 2 Cartel Cheat Firm 1 Cartel Cheat 6. Now, assume that players interact twice. Hence the game is a twice repeated game. Is it possible to have (cartel,cartel) as an outcome?…