Cost reduction and the Herfindahl and Lerner indexes.        Consider an industry where demand has constant price elasticity and firms compete in output levels. In an initial equilibrium, both firms have the same marginal cost, c. Then Firm 1, by investing heavily in R&D, manages to reduce its marginal cost to c′ , c; a new equilibrium takes place. (a) What impact does the innovation have on the values of H and L? (b) What impact does the innovation have on consumer welfare? (c) What do the previous answers have to say about L as performance measure?

Brand X is one of many firms in a competitive industry where each firm has a constant marginal cost of 2 dollars per unit of output. If marginal cost for Brand X rises to 4 dollars per unit and marginal costs of all other firms in the industry stay constant, by how much does the price in the industry increase? a. 2 dollars b. 1 dollar c. 0 dollar d. 2/n, where n is the number of firms in the industry e. None of the above.

Determine the type of market structure and state your reasons.  Perfect Picture Cameras: Perfect Picture Cameras is a national camera company. It competes with a couple of other national camera companies. In order to gain an upper hand in the market, Perfect Picture Cameras has differentiated its camera by including an automatic focus and flash. Perfect Picture Cameras has the ability to raise its prices because of its unique features. However, federal regulators are always watching the company to ensure that no collusion occurs with other camera companies.

Cornell Pharmaceutical, Inc., and Penn Medical, Ltd., supply generic drugs to treat a wide variety of illnesses. A major product for each company is a generic equivalent of an antibiotic used to treat postoperative infections. Proprietary cost and output information for each company reveal the following relations between price (marginal cost) and output:   P = $10 + $0.004Qc (Cornell)   P = $8 + $0.008 Qp (Penn)   1. Assuming these two firms make up the entire industry, determine the industry supply curve when P < $10.   2. Determine the industry supply curve when P > $10.

Type out the correct answer ASAP with proper explanation of it within 40 50 minutes.will give you thumbs up only for the correct answer. Thank you   Inverse market demand is: P = 1,000 - (Q1+ Q2). Costs for each firm are identical and given by: Ci(Qi) = 4Qi   The profit earned by the leader in a Stackelberg oligopoly equals $   What is Q1?   What is Q2?   What is Price

A firm has #1.5million in sales, a Lerner index of 0.57, a marginal cost of #50, and competes against 800 other firms in its relevant market. a. What price does this firm charge its customers. b. By what factor does this firm mark up its price over marginal cost c. Do you think this firm enjoys much market power? Explain.

Two firms engage in Cournot competition in the Everlasting Gobstopper industry. The price elasticity of demand is-2. Firm 1 has aconstant marginal cost of $110.00 per unit, and firm 2 has a constant marginal cost of $181.50 per unit. If the two firms are currently inequilibrium, what is firm 2's share of the market? Enter your answer as a decimal, rounded to two places if necessary.______ Please show all steps

onsider a homogenous good industry with four firms. Total demand is given by D(p)=200-p.The variable (=marginal) cost of each of the firms is c1=10, c2=20, c3=30 and c4=35. Firms compete in prices. Suppose firms 1 and 2 merge into one entity and produce with a marginal cost of 15.   Which of the following statements is correct?     After the merger, total welfare increases by $500.     After the merger, total welfare decreases by $500.     After the merger, total welfare increases by $1000.     After the merger, total welfare decreases by $1000.     None of the above.

In a market with a single price-making firm with total costc(y) = 2y, the industry demand is givenbyQ= 100−2p. a) Find the inverse industry demand by solving forp, then graph the inverse industry demandwith price on they-axis. b) How do you expect the price of the good to be relative to its marginal cost?c) How do you expect the Lerner Index to be in relation to 0 and 1? Will it be 0? Will it be 1? d) Find the optimal supply and the equilibrium price in this market. Does the price match yourexpectations? e) Calculate the Lerner Index and mark-up in this market. Does this match your expectationsfor the Lerner Index?

Which of the following do not qualify as potential driving forces capable of inducing fundamental changes in industry and competitive conditions? 1.Reductions in both supplier and buyer bargaining power and higher barriers to entry into the industry 2. Reductions in uncertainty and business risk, changes in who buys the product and how they use it, and diffusion of technical know-how across more companies and more countries 3. Changes in an industry's long-term growth rate and changes in cost and efficiency 4. Entry or exit of major firms, government policy changes and/or regulatory influences 5. Growing buyer preferences for a more standardized product instead of strongly differentiated products (or for a more differentiated product instead of nearly identical or weakly differentiated products.