Principles of Microeconomics, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134069609
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 13, Problem 3.1P
To determine
Total revenue, total cost, profit,
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(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!
(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
d. If the dominant company wants to limit competition from fringes, what can the dominant company do? What is the name of this strategy?
Chapter 13 Solutions
Principles of Microeconomics, Student Value Edition (12th Edition)
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- Take a market with just one business and high obstacles to entry, where P = 100 - 2Q and MR = 100 - 4Q describe the demand curve. Assume that overall expenses are zero (hence, marginal cost is equal to 0). What would the going rate be in this marketplace? P = 20 P = 30 P = 50 P = 40arrow_forwardA 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. What is the equilibrium price set by the dominant firm? Calculate the total market demand at the price found in question 2(a). How much will the competitive fringe supply to the market at the price found in question 2(a)? How much will the dominant firm supply to the market at the price found in question 2(a)? 5. Show the above answers graphically.arrow_forwardA 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). c) How much will the competitive fringe supply to the market at the price found in question (a)? d) How much will the dominant firm supply to the market at the price found in question (a)? Show the answers graphically.arrow_forward
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