There are 80 firms of type A and 60 firms of type B in a perfectly competitive market. On one hand, type A firm faces a fixed cost (all sunk) of $12 and average variable cost is 2q. On the other hand type B firm faces a fixed cost (all sunk) of $100 and the variable cost is 3q. Market demand function is given by Q=1200-70P. Find the equilibrium quantity of a type A firm and its profit, respectively. q=4, profit-$4 q-2, profit=$4 Oq-3, profit=$6 q=5, profit-$23
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- PROBLEM (5) (In a market with demand Q = 780 - p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q) = 3(Q)^2. Calculate the market price under each of the 2 scenarios below, (i) B and C jointly form the fringe supply and A is the dominant firm in the dominant firm model. ( ii) They act as perfectly competitive firms -as if trying to maximize total surplus and minimize DWL- that is, their joint MC serves as the “market supply” for the competitive market. Please answer all the parts!Asap Three electricity generating firms are competing in the market with the inverse demand given by P(Q) = 20-Q. All firms have constant marginal costs. Firm 1's marginal cost is MC = 5; it has a capacity constraint of K1 = 5 units. Firm 2's marginal cost is MC = 8; it has a capacity constraint of K2 = 2.5 units. Firm 3's marginal cost is MC= 10; it has a capacity constraint of K3 = 2.5 units.A. The three firms compete in the style of Cournot. Please compute the Nash equilibrium quantities. Also compute the price in the Nash equilibrium.B. Which of these firms would have produced a larger quantity if it had a larger capacity? Please explain.Brand X is one of many firms in a competitive industry where each firm has a constant marginal cost of 2 dollars per unit of output. If marginal cost for Brand X rises to 4 dollars per unit and marginal costs of all other firms in the industry stay constant, by how much does the price in the industry increase? a. 2 dollars b. 1 dollar c. 0 dollar d. 2/n, where n is the number of firms in the industry e. None of the above.
- Consider a market with only two firms. The firms operate in a Stackelberg type market where Firm 1 is the follower & Firm 2 is the leader. The market inverse demand function is: P = 120 – 2Q, where Q = q1 + q2. Each firm has a similar cost structure with a marginal cost; MC = 12, though each have different fixed costs; FC1 = 50 & FC2 = 80. Answer the following questions: a. If both firms wish to compete, what is the optimal quantity for each firm (qi) and the market price? b. What are the profits for each firm from the strategy in part a? c. If both firms choose to collude and not directly compete, what is the new price, quantity, and profits for each firm?Use this information for this and the next question: The market inverse demand curve is given by P(Q) = 100 - 0.02Q, where Q is the total output in the industry. The dominant firm in this industry has costs given by TC(q) = 40q. In addition, there are 25 small firms. These firms are known as the 'competitive fringe' of the market. These small firms all take as given the price established by the dominant firm in the industry. All small firms have the same cost function: TC = 60q + q2. If the dominant firm's quantity is 1000 units, the market price will be a) 80 B) 70 C) 75 D) 85 E) None of the aboveSuppose that, prior to other firms entering the market, the maker of a new smartphone (Way Cool, Inc.) earns $80 million per year. By reducing its price by 60 percent, Way Cool could discourage entry into “its” market, but doing so would cause its profits to sink to −$2 million. By pricing such that other firms would be able to enter the market, Way Cool’s profits would drop to $30 million for the indefinite future. In light of these estimates, do you think it is profitable for Way Cool to engage in limit pricing? Is any additional information needed to formulate an answer to this question? Explain.
- The table below shows the average cost (AC) for a purely competitive market. The average revenue (AR) is constant at RM5 per unit and the firm’s total fixed cost (TFC) is RM4. Determine the profit-maximizing output and show the equilibrium of the firm in a diagram. Output (Units) Total Revenue (RM) Average Cost (RM) Total Cost (RM) Marginal Cost (RM) Marginal Revenue (RM) 1 8.0 2 5.5 3 4.0 4 3.5 5 3.8 6 4.5 7 6.0The market demand and supply function for Pizza in New Town were: Qd = 10,000 – 100P Qs = - 2,000 + 100P A. Determine the equilibrium price and quantity of the Pizza. B. Plot the market and demand curves, label the equilibrium point E, and draw the demand curve faced by a single Pizza shop in this market on the assumption that the market is perfectly competitive. Show also the marginal revenue of the firm on the figure. C. If the total cost function of the firm is TC = 500 + 2Q + Q2, determine the price-quantity combination that will maximize the firm’s profit. D. Determine the profit. What adjustments should be anticipated in the long run?Consider a competitive industry with a market demand curve of P = 121 – Q, where P is market price and Q is the quantity demanded in the market. In the short run there are 4 firms in the industry, and each firm has a total cost function of TC = 25 + 6q + q2, where q is output of the individual firm. In the long-run market equilibrium what is the number of firms in the industry? Group of answer choices 26 15 5 110 21
- Oligopolies: a) Based on the information in the table, what is the demand function for this market? b) Calculate total and marginal revenues for this market in the table c) if the total cost function for this market is TC = 500 + 10Q2 , calculate the total and marginal costs for each of the quantities in the table d) What are the profit-maximizing quantity, price, and profit for this market? e) If there are two firms Atlas and Bowden in this market with the same earlier total cost function and they engage in Cournot competition, what is each firm's equilibrium quantity, price, and profit? [NB: round quantities to nearest integer to find equilibrium quantity, price, and profit] f) Is this a long run equilibrium? Why or why not?Firm A: TC = 10 + 60Q - 10Q^2 + 0.6Q^3 Firm B: TC = 2 + 50Q - 7Q^2 + Q^3 the graph below presents the short-run average cost functions for Firms A and B. a. to which does firm A or B does SRAC1 pertain? b. To which does Firm A or Firm B does SRAC 2 Pertain. c. Firm A and Firm B being the only 2 firms in the market, will tend to engage in fierce price competition in order to win market share and enhance profit. True or false?Consider an industry with only two firms: firm A and firm B. The industry’s inverse demand is P(Q) = 400 − 1/10Q where P is the market price and Q is the total industry output. Each firm has a marginal cost of $10. There are no fixed costs and no barriers to exit the market. Suppose the two firms engage in Stackelberg competition, with firm A moving first, and firm B moving second. Find the equilibrium price in the industry, the equilibrium outputs, as well as the profits for each firm