• Find the profit-maximizing price of the dominant firm.• How much does the competitive fringe supply to the market? Suppose that there is "dominant" firm with total cost function ofc(q) = 100 + 10q +0.25q². It faces a market demand function%3D(inverse) of p = 100 – 0.5Q, where Q indicates total market supply.This dominant firm has to deal with 10 fringe firms, each of whombehaves perfectly competitively. Each fringe firm has a marginal cost%3Ddc(q)= 20q + 25dqfunction

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• Find the profit-maximizing price of the dominant firm. • How much does the competitive fringe supply to the market?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 18RQ: What is a tie-in sale? How might it reduce competition and when might it be acceptable?

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Question

• Find the profit-maximizing price of the dominant firm.
• How much does the competitive fringe supply to the market?

Suppose that there is "dominant" firm with total cost function of
c(q) = 100 + 10q +0.25q². It faces a market demand function
%3D
(inverse) of p = 100 – 0.5Q, where Q indicates total market supply.
This dominant firm has to deal with 10 fringe firms, each of whom
behaves perfectly competitively. Each fringe firm has a marginal cost
%3D
dc(q)
= 20q + 25
dq
function

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