In the mobile phone market, Samsung and Apple constitute a duopoly in the production of devices. The American firm has the following demand q(a) = 10 - p(a )+ 0.25p(s), and the Korean firm, q(s) = 20 - p(s)+ 0.5p(a). Because both firms assembly their devices in China, their cost structure is the same and equal to ?(q) = 10q, answer the following questions. a) What would be the equilibrium (quantity, price, and profit) in this market, and interpret your answer. b) If they decide to form a cartel, what are the new quantities, prices, and profits? NB.a=apple and s=Samsung
In the mobile phone market, Samsung and Apple constitute a duopoly in the production of devices. The American firm has the following demand q(a) = 10 - p(a )+ 0.25p(s), and the Korean firm, q(s) = 20 - p(s)+ 0.5p(a). Because both firms assembly their devices in China, their cost structure is the same and equal to ?(q) = 10q, answer the following questions. a) What would be the equilibrium (quantity, price, and profit) in this market, and interpret your answer. b) If they decide to form a cartel, what are the new quantities, prices, and profits? NB.a=apple and s=Samsung
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
Chapter12: Price And Output Determination: Oligopoly
Section: Chapter Questions
Problem 2E
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Question
In the mobile phone market, Samsung and Apple constitute a duopoly in the production of devices.
The American firm has the following demand q(a) = 10 - p(a )+ 0.25p(s), and the Korean firm, q(s) = 20 -
p(s)+ 0.5p(a). Because both firms assembly their devices in China, their cost structure is the same and
equal to ?(q) = 10q, answer the following questions.
a) What would be the
answer.
b) If they decide to form a cartel, what are the new quantities, prices, and profits?
NB.a=apple and s=Samsung
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