• Consider a market with two identical firms: Firm A and Firm B. The market demand is P = 310 - 2Q, where Q = qA + qe and the firms cost structure is %3D such that MCA = ACA = 40 and MCB ACB = 35. %3D %3D Write the expression for the firms' reaction functions: (a) Firm A's reaction function = |(Write the function in its simplest form. Use only the number of decimal places required - eg., 5.75 and 0.5.) (b) Firm B's reaction function = (Write the function in its simplest form. Use only the number of decimal places required - eg., 5.75 and 0.5.)

• Consider a market with two identical firms: Firm A and Firm B. The market demand is P = 310 - 2Q, where Q = qA + qe and the firms cost structure is %3D such that MCA = ACA = 40 and MCB ACB = 35. %3D %3D Write the expression for the firms' reaction functions: (a) Firm A's reaction function = |(Write the function in its simplest form. Use only the number of decimal places required - eg., 5.75 and 0.5.) (b) Firm B's reaction function = (Write the function in its simplest form. Use only the number of decimal places required - eg., 5.75 and 0.5.)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 3E

See similar textbooks

Similar questions

A firm in a perfectly competitive industry has patented a newprocess for making widgets. The new process lowers the firm’saverage cost, meaning that this firm alone (although still aprice taker) can earn real economic profits in the long run. a. If the market price is $20 per widget and the firm’s marginalcost is given by MC=0.4q , where q is the dailywidget production for the firm, how many widgets willthe firm produce? b. Suppose a government study has found that the firm’snew process is polluting the air and estimates the socialmarginal cost of widget production by this firm to be. If the market price is still $20, what is thesocially optimal level of production for the firm? Whatshould be the rate of a government-imposed excise tax tobring about this optimal level of production? c. Graph your results.
JointJuice produces a prepackaged joint support supplement for relief of joint pain with 180 tablets per bottle and operates in a perfectly competitive market. Basically, all the firms in this competitive market have technologies (production and cost conditions) that are the same as JointJuice’s. Suppose JointJuice’s total cost function is given by the following where q is JointJuice’s quantity of packages per day: C(q) = 250 + 6q + 0.1q^2 The market demand function for the output in this market is given by: Q = 1848 - 2P If there are 20 identical firms in this industry, find the market equilibrium price for the prepackaged supplements. Calculate JointJuice’s optimal output level and profits given the market price for the product. If JointJuice is typical of the firms in this industry calculate the firm’s long-run equilibrium output, price, and profit level. Suppose the situation changes. JointJuice has its plant in Portland Oregon. The local government passes a new tax on…
Suppose that two European electronics companies, Siemens (Firm S) and Alcatel-Lucent (Firm T), jointly hold a patent on a component used in airport radar systems. - Demand for the component is given by the following function \[ P=1,000-Q \] - The total cost functions of manufacturing and selling the component for the respective firms are \[ \begin{array}{c} T C_{S}=70,000+5 Q_{S}+0.25 Q_{S}^{2} \\ T C_{T}=110,000+5 Q_{T}+0.15 Q_{T}^{2} \end{array} \] Assume that the firms agreed to form cartel and calculate the joint profit.
I need to second half answered. JointJuice produces a prepackaged joint support supplement for relief of joint pain with 180 tablets per bottle and operates in a perfectly competitive market. Basically, all the firms in this competitive market have technologies (production and cost conditions) that are the same as JointJuice’s. Suppose JointJuice’s total cost function is given by the following where q is JointJuice’s quantity of packages per day: C(q) = 250 + 6q + 0.1q^2 The market demand function for the output in this market is given by: Q = 1848 - 2P If there are 20 identical firms in this industry, find the market equilibrium price for the prepackaged supplements. Calculate JointJuice’s optimal output level and profits given the market price for the product. If JointJuice is typical of the firms in this industry calculate the firm’s long-run equilibrium output, price, and profit level. - answers for first half JointJuice is a prepackages supplement-producing firm. Suppose…
The market demand and supply function for Pizza in New Town were: Qd = 10,000 – 100P Qs = - 2,000 + 100P A. Determine the equilibrium price and quantity of the Pizza. B. Plot the market and demand curves, label the equilibrium point E, and draw the demand curve faced by a single Pizza shop in this market on the assumption that the market is perfectly competitive. Show also the marginal revenue of the firm on the figure. C. If the total cost function of the firm is TC = 500 + 2Q + Q2, determine the price-quantity combination that will maximize the firm’s profit. D. Determine the profit. What adjustments should be anticipated in the long run?
Consider the following market demand function: Q= 20-2P, where P is the market price. Suppose there are two firms- A,B in the market and they have the same cost function: the per unit cost of producing output is 4. The firms compete by choosing quantities. Find the reaction functions for both the firms if they are maximizing profits. What is the profit maximizing output for each firm and corresponding market price? If there was only one firm in the market how would your answer change?
*COULD YOU SOLVE D-F* Suppose the inverse demand function is P = a −bQ, where a is the market price whenQ=0 and b is the slope of the function. Suppose there are two firms, Firm 1 and Firm 2, where their cost functions are denoted by Ci(Qi) = ciQi for i ∈{1, 2}. a) Write the profit function for each firm with price as a function of Q1, Q2 b) Solve for M Ri for i ∈{1, 2}and solve for the Best Response Functions (where M Ri = M Ci) c) Solve for the Nash Equilibrium. Note that your answer will be in terms of (a, c1, c2, b) d) Solve for the price of the market, P using the inverse demand function and your answersfrom part (c). Note that your answer will be in terms of (a, c1, c2, b) e) Solve for the profit for each firm. Note that your answer will be in terms of (a, c1, c2, b) f) If c1 = c2, what value of a will profit equal 0 for both firms?
Consider a market with two firms. Call them firm 1 and firm 2. The demand function describing the market is P = 216 – 0.4Q. Firms are initially identical, with the cost function C(q) = 140 + 40q. Calculate the total profits in the market. Under what conditions, the two firms may succeed to collude? How much would each firm earn if they could collude?
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. What if farmer 1 is a leader and farmer 2 a follower, determine the price, quantity and profits made by these two farmers
Consider an imperfectly competitive service provider, Muscat Automotive Repair Services (MARS), whose total cost of production is C = 30Q +0. 165Q2. Also, MARS faces two different market segments, A and B, whose demands can be linearly expressed as QA = 240 − PA and QB = 120 − 0.5PB . (Hint: the marginal cost is the slope of the total cost function). 4. If MARS decides to segment the market in accordance with the demands of groups A and B, find the profit-maximizing prices and quantities (PA, QA) and (PB, QB).5. What is the value of the consumer surplus for each group A and B, under this segmentation strategy?6. Draw the situation described in (4) and (5) above, clearly showing each group’s profitmaximizing price and quantity, and the areas that correspond to their consumer surpluses.7. Verify the inverse elasticity rule under each of the scenarios described (1) and (4) above.
Consider an industry in which firms produce undifferentiated commodity for which demand is given by X = 100 - P. A number of firms produce the item in question, all of whom have production function where Y is the level of output and a is some constant from (0, 1), K is the amount of capital employed, and L is the amount of labor employed. The prices of capital and labor are fixed at $1 throughout. All firms have fixed costs of $16. (a) Suppose precisely six firms are in this industry, all of which maximize profits taking prices as given. What is the equilibrium in this case? (b) Suppose there is free entry into this industry, with all of the firms having the production function given above. What is the equilibrium in this case?
Suppose that a firm produces identical commodities and sell them in two separate markets charging two different prices. The demand for the commodity in two markets are (1) P1 = 100 - Q1 and (2) P2 = 80 - Q2, where P1 and P2 are the price of the product that the firm charges, while Q1 and Q2 are demand in each market. Suppose that the firm's cost of production is C(Q) = 6Q. (1) What is the firm's total profit function in terms of the quantity of output? How much should this firm sell each product in two separate markets to maximize total profits?