Problem 1: Concentration. A cigarette industry consists of 4 firms, each producing a differentiated product. As common in the tobacco industries, the prices of the differentiated products are the same at P = 2. The demands Q1, Q2, Q3, Q4 for firms 1, 2, 3, 4 are given by Q1 = 7 – P?, Q2 = 6 – 2P, Q3 = 2 – P/2, and Q4 = 12 – P³. (a) What is the market share of each of the four firms? (b) What is the 3-largest-firm concentration? (c) What is the HHI?

Problem 1: Concentration. A cigarette industry consists of 4 firms, each producing a differentiated product. As common in the tobacco industries, the prices of the differentiated products are the same at P = 2. The demands Q1, Q2, Q3, Q4 for firms 1, 2, 3, 4 are given by Q1 = 7 – P?, Q2 = 6 – 2P, Q3 = 2 – P/2, and Q4 = 12 – P³. (a) What is the market share of each of the four firms? (b) What is the 3-largest-firm concentration? (c) What is the HHI?

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter9: Monopoly

Section: Chapter Questions

Problem 1QFR

See similar textbooks

Similar questions

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 andequal to ?(q) = 10q, answer the following questions.a) What would be the equilibrium (quantity, price, and profit) in this market, and interpret youranswer.b) If they decide to form a cartel, what are the new quantities, prices, and profits?
q1(p1, p2) = 1 − 0.5p1 + 0.3p2 q2(p1, p2) = 1 − 0.5p2 + 0.3p1 Assume that costs are given by c1 and c2 for firms 1 and 2, respectively. (a) Write down the profit-maximization problem of each firm. (b) Derive the equilibrium conditions that define the prices the firms can charge.
Assume there are two firms, firm A and B, engaged in Cournot competition. The industry demand curve is given by P = 220 - Q, where Q = QA + QB denotes industry output. Each firm faces a marginal cost of production equal to $16. In equilibrium, what will be the output level of firm A?
Consider two gas stations in a remote village facing the simple linear market demand Q= 300− 5p but have different marginal costs of production, both constant, such that MCx = 20 and MCy = 101. Measuring the quantities Qx on the horizontal axis and the quantities Qy on the vertical axis, draw the reaction curves for each of the gas stations.2. Based on a Cournot equilibrium, find the profit-maximizing quantities Qxand Qy for the two gas stations.3. Based on your answers to (1) and (2) above, if gas station y decided to produce 175 units, (a) what would be the reaction of gas station x, and (b) how would y, in turn, react to that level of output of x?
IF YOU ANSWER THIS ALREADY, PLEASE GIVE IT TO ANOTHER TUTOR P 14 13 12 11 10 9 8 7 6 5 QD 50 100 150 200 250 300 350 400 450 500 Consider a market with the above demand and two firms. Both firms have a constant marginal cost of 7. 1. What price should these firms charge to maximize total industry profit? (Note: the marginal condition we learned will work here but you need to be careful because the changes in quantity on the schedule are not 1. Because of this, you might want to use a brute force approach here. It's worth thinking about how you would reconcile it with the marginal condition though. Also, the marginal condition doesn't match exactly so take the best number from the schedule.) 2. Assuming that if they set the same price, they split the market evenly, what will the profit of each firm be if they both set the above…
Assume that the market demand and the costs of the duopolists are: P=120-0.4(QA + QB) TCA=5QA TCB= 0.2Q2B Also assume that firm B is the sophisticated leader, Determine: a. The reaction curve of A ,the reaction curve of B and the profit function of A b. Stackelberg equilibrium output level for firm A and Stackelberg equilibrium output level for firm B c. The market price
There are two firms selling differentiated products. Firm A faces the following demand for his product: QA=20-1/2PA+1/4PB Firm B faces the following demand: QB=220-1/2PB+1/4PA PA represents the price set by firm A. PB represents the price set by firm B.Assume that the marginal cost is zero both for firm A and firm B.What are the equilibrium prices of a simultaneous price competition?What would the equilibrium prices be if A is the leader and B is the follower?
Figure: Beverages) Suppose the market above has four major producers that face constant costs. If the producers charge the competitive and efficient level of prices, then price and output in the market would be: Group of answer choices $4 and 4000 $2 and 4000 $4 and 2000 $2 and 2000
Consider a dominant firm facing an inverse demand P = 100-Q, with marginal cost 18. The supply of competitive fringe is P = 10 + 4Q. a. Find the market shares of dominant firm and competitive fringe
A producer of ballpoint pens has been purchasing ink from an ink supplier and is considering acquiring the ink supplier. Would the pen company be more or less likely to vertically integrate by buying the ink manufacturer if the government taxes ink?
Suppose that demand for cruise ship vacations is given by P =1200 − 5Q, whereQ is the total number of passengers when the market price is P.a) The market initially consists of only three sellers, Alpha Travel, Beta Worldwide, and ChiCruiseline. Each seller has the same marginal cost of $300 per passenger. Find the symmetricCournot equilibrium price and output for each seller.
Q42 Tha use of cannabis was legalized in Canada in 2017. The cannabis sector (Industry X) and the production of fertilizers used in growing cannabis (Industry Y) both have four-firm concentration ratios of 82 percent, but the Herfindahl index for X is 4,056, while that for Y is 3,975. These data suggest Multiple Choice both industries are experiencing X-inefficiency. greater market power in Y than in X. greater market power in X than in Y. that price competition is stronger in X than in Y. both industries are monopolistically competitive.