Two firms, the Alliance Company and the Bangor Corporation, produce vision systems. The demand curve for vision systems is P 200,000 - 8(21+Q2 where P is the market price Q1 is the number of vision systems produced and sold per month by Alliance, and Q2 is the number of vision systems produced and sold per month by Bangor. Alliance's total cost (in dollars) is TC1 6,000Q1 Bangor's total cost (in dollars) is TC2 10,000 Q2 1. What type of oligopolistic market are the firms in and what are the reaction functions? 2. What are the two If managers at these two firms set their own output levels to maximize profit, assuming that managers at the other firm hold constant their output, what is the equilibrium price? 3. What is the output of each firm? 4. How much profit do managers at each firm earn?

Two firms, the Alliance Company and the Bangor Corporation, produce vision systems. The demand curve for vision systems is P 200,000 - 8(21+Q2 where P is the market price Q1 is the number of vision systems produced and sold per month by Alliance, and Q2 is the number of vision systems produced and sold per month by Bangor. Alliance's total cost (in dollars) is TC1 6,000Q1 Bangor's total cost (in dollars) is TC2 10,000 Q2 1. What type of oligopolistic market are the firms in and what are the reaction functions? 2. What are the two If managers at these two firms set their own output levels to maximize profit, assuming that managers at the other firm hold constant their output, what is the equilibrium price? 3. What is the output of each firm? 4. How much profit do managers at each firm earn?

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

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 7E

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