There are two firms, wholesaler (W) and retailer (R). W supplies product to R, who then sells it to final consumers. W has a constant marginal cost of production equal to 0.2. W charges per unit price p to R, who has no other cost besides this. First, W chooses its price p. Then after observing p, R chooses the final consumer price x. Consumer demand for the final product is given by D(x)=1-x. Find the quantity of the final product sold in this market.
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- Suppose that a well-known scientific fiction writer finishes a new book. The writer’s publisherfinds the demand curve for this new book is given by Q = 4200 − 200P, where P is its price. It will cost $2000 to set the book in type. This setup cost is necessary before any copies can be printed. In addition to the setup cost, there is a marginal cost of $8 per book for every book printed. Assume that the publisher wants to maximize the profit from this new book, and considers them-selves as a monopoly.(a) Write down the total revenue (T R(Q)), as a function of the quantity (Q).(b) Write down the total cost (T C(Q)), as a function of the quantity (Q).(c) Find the profit-maximizing quantity (Q∗).(d) Find the profit-maximizing price (P ∗).(e) What is the profit? Please just help with c,d,eAssume that there is only a single seller of papadums, and she knows eachbuyer’s willingness to pay. Assume that this seller incurs a cost of $4.00 perunit of papadum produced (i.e., the marginal cost is constant). If she intends to maximise profits, how many papadums would this seller supply to the market, and what price would she charge? Remember, the price has to be the same for each unit sold. Hint: start at a price of $17 and calculate what profit would be. Then lower the price just enough to attract an additional buyer and calculate what the new profit would be. Repeat this until all four buyers are purchasing the good and then check which price yields the highest profit. Alternatively, you can calculate the marginal revenue from lowering the price to attract an additional buyer and compare it to marginal cost.COURSE: MICROECONOMICS - Cournot Model:In the market for a given good there are only 2 firms satisfying the demand, and their respective total cost functions respond to the form: CTi = 10Qi + 5 and the demand is estimated to be: P = 31 - QIf the decision variable for both firms is that the quantity they will produce and realize will be decided simultaneously it is asked to:(a) calculate the profit and reaction function of each firmb) graph market equilibriumc) calculate the profits that both companies will obtain in equilibrium
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- Andrea’s Day Spa began to offer a relaxingaromatherapy treatment. The firm asks you how muchto charge to maximize profits. The first two columnsin Table 10.5 provide the price and quantity for thedemand curve for treatments. The third column showsits total costs. For each level of output, calculate totalrevenue, marginal revenue, average cost, and marginalcost. What is the profit-maximizing level of output forthe treatments and how much will the firm earn inprofits?Consider a market with two firms, A and B, producing two varieties of the same product withdifferent qualities. In particular, the variety produced by firm A has quality Va = 2, while thevariety produced by firm B has quality Vb = 10.Firm A costs are TCa(qa) = 1/2*qa, while firm B costs are TCb(qb) = 2*qbConsumers value quality differently, with each individual i valuing quality bi , a numberbetween 0 and 1. Consumers are distributed uniformly between [0,1]. (As considered in class:that is, for any two values b1 and b2 > b1 in [0,1] the number (or mass) of individuals withbi ∈ [b1, b2] is equal to b2 − b1.)a) Draw a graph illustrating the utility of different individuals (as a function of bi on thehorizontal axis) for the following given value of (Pa, Pb) = (2/3 , 5) . Indicate whichindividuals do not buy anything, which individuals buy the variety from firm A, andwhich individuals buy the variety from firm B.b) What is the value of bi for which an individual is indifferent between…1. ThedemandfunctionforagoodisgivenbytheequationP=a−bQwhilethetotalcost function is TC = dQ2 + eQ + f, where a, b, d, e and f are positive constants. (a) Derive the equation for profit.(b) Derive an expression for the value of Q for which profit is maximised.
- Please no written by hand solution A local KFC franchisee is evaluating the number of fried chickens to produce each day. The following table shows the 4 alternatives, the states of nature and their payoffs Daily Supply 40 50 60 70 Daily Demand 40 $80 $0 -$80 -$160 50 $80 $100 $20 -$60 60 $80 $100 $120 $40 70 $80 $100 $120 $140 What would your decision be if the following rules are applied? (show your calculation) Maximax Maximin La Place Minimax-regretCOURSE: MICROECONOMICS - Stackelberg ModelIn a given market good there are only 2 firms that satisfy the demand, and their respective total cost functions are: CTi = 400 and the demand that is estimated is P = 120 - 2QIf the exception variable of both firms is the quantity they will produce, such that the decisions to produce are made sequentially firm number 1 will be the leader who decides the quantity to produce and firm number 2 (follower) decides based on the production of firm number 1, we ask:(a) quantity produced by each firm and its equilibrium price in the market.(b) Profit of each company at equilibrium and (c) Graph your resultsThe global pandemic 2020 has promoted a race to capture the market for introducing effective vaccine and treatments. (please use excel/word) a)- If PFIZER is the sole vaccine provider given the following information, answer the questions below: Output Price/Unit Total Cost 1 5500 1000 2 5000 1200 3 4500 1500 4 4000 2500 5 3500 4000 6 3000 5700 7 2500 7500 8 2000 9400 9 1500 11400 10 1000 13500 Given the tabular information above find the profit-maximizing output and price also illustrate the same using the two-dimensional labeled diagram. Show the calculation as well. (use excel) b)- Assume if many firms enter into the business of providing vaccine determine: How the demand curve of PFIZER would change and how it would now maximize its profit? The kind of market structure now PFIZER is forced to operate in? Also,…