Given a market demand Q=200-2P and 2 firms in a cartel model with Firm A's total cost TCA=5qA² +qA, Firm B's total cost is TCg= 8qg²+298, Q=qA+qg, the profit maximizing output for Firm A can be computed by equating the O none of these O (100-0.5Q²) and the partial derivative of (TCA + TCB) with respect to q partial derivative of TCA with respect to q and the partial derivative of TR-100-0.5qA² -0.5q² with respect to qa partial derivative of (TCA + TCB) with respect to q, and the partial derivative of TR-100-0.5qA² -0.5qB² with respect to q O (100-0.5Q²) and the partial derivative of TC, with respect to q
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- There 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 a duopolistic market with an inverse demand curve P(Q) = 460 − 4Qand constant marginal costs for each firm that are given by MC(Q) = 10.Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces 37.5 units and the prevailing market price is 160. How would the joint profits of these two firms change if they successfully formed a cartel? Change in joint profits: ? (Enter your answer rounded to two decimal places; include a negative sign if appropriate.)Assume that two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following linear demand functions:P=200-QA-QBwhere QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies areTCA = 1500+55 QA +QA2TCB = 1200+20 QB +2QB2Assume that the firms form a cartel and maximize total industry profits,a. Determine the optimal output and selling price for each firm.b. Determine Frim A, Firm B, and total industry profits at the optimal solution foundin part (a).c. Show that the marginal cost of the two firms are equal at the optimal solutionfound in part (a).
- New ans pls Which of the following factors reduce a cartel's ability to cooperate? • All of the other factors mentioned would make it harder to sustain a cartel. • There are no barriers to entry in Industry X. • Firms in Industry X are impatient. That is, they have a low valuation for future profits. • Firms in Industry X use different production techniques and have different cost functions. • Strict anti-trust enforcement applies in the region in which Industry X operates.Suppose the market demand for a product is Q(P) = 120 – P. There are no fixed costs of operating in this industry, but there are variable costs VC(Q) = 20Q. (b) Suppose there are two firms A and B in this industry, with identical costs functions (as above), who are thinking of colluding to maintain the monopoly quantity. What profits would they be able to make if they would split the monopoly quantity equally, i.e. QA = QB = QM/2? (d) Is the cartel as described in (b) sustainable if the firms interact only once? Justify and then interpret your answer. PLEASE ONLY ANSWER D SINCE I ALREADY UNDERTAND BSuppose the demand for oil is P=168Q-0.20. There are two oil producers who do not cooperate. Producing oil costs $8 per barrel. What is the profit of each cartel member?
- Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.40 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) When they act as a profit-maximizing cartel, each company will produce 20 cans and charge $----- per can. Given this information, each firm earns a daily profit of $------ so the daily total industry profit in the beer market is $------------ . Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume the two companies form a cartel and decide to work together. Both firms initially agree to produce…Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.80 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together.Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.80 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together. Monopoly Outcome0701402102803504204905606307002.001.801.601.401.201.000.800.600.400.200PRICE (Dollars per can)QUANTITY (Cans of beer)DemandMRMC = ATC When they act as a profit-maximizing cartel, each company will produce cans and charge per can. Given this information, each firm earns a daily…
- Discuss Many electronics stores like EMAX, and Jumbo have low-price guaranteepolicies. At a minimum, these guarantees promise to match a rival’s price, and somepromise to beat the lowest advertised price by a given percentage. Do these types ofpricing strategies result in cutthroat competition and zero economic profits? If not, whynot? If so, suggest an alternative pricing strategy that will permit these firms to earnpositive economic profits.Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.60 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Consider 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