The average avoidable cost for a fringe firm is AAC(q) = 20/q +5q. The marginal cost function for a fringe firm is MC = 10q. There are 10 fringe firms. The marginal cost of the dominant firm is 2 and the demand function is Q = 100 − P. What is the supply function of the fringe? What is p0, the minimum price at which the fringe will supply? What is the residual demand function for the dominant firm? What is the profit-maximizing price of the dominant firm? Compare monopoly profits to the profits of the dominant firm. Which market structure is socially preferable, dominant firm or monopoly? Why?

The average avoidable cost for a fringe firm is AAC(q) = 20/q +5q. The marginal cost function for a fringe firm is MC = 10q. There are 10 fringe firms. The marginal cost of the dominant firm is 2 and the demand function is Q = 100 − P. What is the supply function of the fringe? What is p0, the minimum price at which the fringe will supply? What is the residual demand function for the dominant firm? What is the profit-maximizing price of the dominant firm? Compare monopoly profits to the profits of the dominant firm. Which market structure is socially preferable, dominant firm or monopoly? Why?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter21: Getting Employees To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 9MC

See similar textbooks

Similar questions

The cost function of the fringe firms is TC(q) = 4q, their total capacity is K = 2 units. The dominant firm has TC(q) = q. The market demand is Q(P) = 20 – 2P. What is the fringe supply? What is the profit maximizing price for the dominant firm? with expl plz
A market consists of a dominant firm and a number of fringe firms. The followings are the information about these firms. Total market demand: QALL=300 – (2.5) P The competitive fringe supply function (total): QF=2P-12 The dominant firms marginal cost function: MC = 12 + (1⁄2) QD. a) What is the equilibrium price set by the dominant firm? b) How much will the dominant firm supply to the market at the price found in question (a)? Show the answers graphically
The cost function for a firm is given by CQ) = 5 + Q If the firm sells output in a perfectly competitive market and other firms in the industry sell output at a price of $20, what price should the manager of this firm put on the product? What level of output should be produced to maximize profits? How much profit will be earned? As per your solution provided The profit is maximized: MC=MR=P C(Q) = 5+Q2 MC= dC/dQ = 2Q ...what is dC and dQ here??? and why dC/dQ = 2Q?? please assist
Suppose that the market demand curve of food delivery service in city A is given by P = 100 − Q, where P is the price and Q is the quantity. Currently there is only one firm. The incumbent’s cost function is given by TC = 40q, where q is the quantity provided by the incumbent. Suppose that there’s a potential entrant with cost function TC = 40qe + 100, where qe is the quantity provided by the entrant. The 100 is the sunk cost for developing the delivery system that is paid upon entering the market. a. If the entrant observes the incumbent providing qi units of service and expects this level to be maintained, what output will the entrant produce? b. At what price will the incumbent sell this output to keep the entrant out of the market?
A market consists of a dominant firm and a number of fringe firms. The followings are the information about these firms. Total market demand: QALL=300 – (2.5) P The competitive fringe supply function (total): QF=2P-12 The dominant firms marginal cost function: MC = 12 + (1⁄2) QD. a) What is the equilibrium price set by the dominant firm? b) How much will the competitive fringe supply to the market at the price found in question (a)? Show the answers graphically.
A market consists of a dominant firm and a number of fringe firms. The followings are the information about these firms. Total market demand: QALL=300 – (2.5) P The competitive fringe supply function (total): QF=2P-12 The dominant firms marginal cost function: MC = 12 + (1⁄2) QD. a) What is the equilibrium price set by the dominant firm? b) Calculate the total market demand at the price found in question (a). Show the answers graphically.
For the entry deterrence example we discussed today, [Market demand Q(p) = 100 p. the incumbent firm's marginal cost MC = 20, the entrant's marginal cost MC = 20] (A) The incumbent firm's strategy if F = 300 will be entry deterrence. (F is the Entrant's fixed entry cost.) (B) If F = 300 entry deterrence is socially optimal. * (A) is true; (B) is false (A) is false; (B) is true Both (A) and (B) are false Both (A) and (B) are true
True or False: Horizontal mergers between firms producing distant substitutes are more likely to harm economic welfare.
Suppose the inverse demand curve in a market is D(p) =a-bp, where D(p) is the quantity demanded and p is the market price. Firm 1 is the leader and has a cost function c1(y1)=cy1 while firm 2 is the follower with a cost function c2(y2 )=. Firm 1 sets its price to maximise its profit. Firm 1 correctly forecasts that the follower takes the price leader’s chosen price as given (price taker) and chooses output so as to maximise its own profit. Write down the profit function of the follower. Calculate the profit maximising quantity that the follower selects given the leader’s chosen price p (i.e., calculate the follower’s supply curve S(p)). Interpret the solution to the profit maximising problem.
Consider an HMO with a demand curve of the following form: Q = 100 – 2 P. Suppose that its marginal and average costs were $20. If the firm maximizes profits, determine its price, output, and profits.
(Dominant Firm with Fringe Competition) The structure of competition in the market for product A follows the dominant firm model with competitive fringes, where there is one company that is a dominant player and there are many fringes companies that compete competitively. The total demand for product A in this market is expressed by P = 1200 - Q, while the supply function of the competitive fringe is expressed by Sf: qf = P - 240. If the dominant firm is known to have marginal costs as follows: MCd = 240 + 0.25qd b. What is the equilibrium price and the equilibrium quantity for the dominant firm? Show your answer mathematically and graphically. c. In that equilibrium, what is the supply of competitive fringes? How many total products are there on the market? What is the market share of the dominant company and the fringe company? Show your answer mathematically and graphically Thank you Bartleby!
(Dominant Firm with Fringe Competition) The structure of competition in the market for product A follows the dominant firm model with competitive fringes, where there is one company that is a dominant player and there are many fringes companies that compete competitively. The total demand for product A in this market is expressed by P = 1200 - Q, while the supply function of the competitive fringe is expressed by Sf: qf = P - 240. If the dominant firm is known to have marginal costs as follows: MCd = 240 + 0.25qd a. What is the minimum price level required by the competitive fringe to offer output? At what price level will the fringe company supply the entire market? Thank you bartleby!