MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 9, Problem 10CACQ
To determine
The firm's equilibrium price and corresponding profits is to be ascertained.
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suppose a single firm produces all of the output in a contestable market. the market inverse demand function is p=350-5q, and the firm's cost function is c(q)=8q. determine the firm's equilibrium price and corresponding profits
Suppose a single firm produces all of the output in a contestable market. The market inverse demand function is P = 250 -4Q, and the firm’s cost function is C(Q) = 8Q. Determine the firm’s equilibrium price and corresponding profits.Price: $
Profits: $
Suppose a single firm produces all of the output in a contestable market. Analysts determine that the market inverse demand function is P = 400 -4Q, and the firm’s cost function is C(Q) = 16Q. Determine the firm’s equilibrium price and corresponding profits.Price: $
Profits: $
Chapter 9 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
Ch. 9 - Prob. 1CACQCh. 9 - Prob. 2CACQCh. 9 - Prob. 3CACQCh. 9 - Prob. 4CACQCh. 9 - Prob. 5CACQCh. 9 - Prob. 6CACQCh. 9 - Prob. 7CACQCh. 9 - Prob. 8CACQCh. 9 - Prob. 9CACQCh. 9 - Prob. 10CACQ
Ch. 9 - Prob. 11PAACh. 9 - Prob. 12PAACh. 9 - Prob. 13PAACh. 9 - Prob. 14PAACh. 9 - The opening statement on the website of the...Ch. 9 - Prob. 16PAACh. 9 - Prob. 17PAACh. 9 - Prob. 18PAACh. 9 - Prob. 19PAACh. 9 - Prob. 20PAACh. 9 - Prob. 21PAACh. 9 - Prob. 22PAACh. 9 - Prob. 23PAACh. 9 - Prob. 24PAA
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- Suppose we have two identical firms A and B, selling identical products. They are the only firms in the market and compete by choosing prices at the same time. The Market demand curve is given by P=244-2Q. The only cost is a constant marginal cost of $18. If Firm A chooses a price of $175 what is Firm B's best response? Enter a number only, no $ sign. 131arrow_forwardConsider an industry with N firms that compete by setting the quantities of an identical product simultaneously. The resulting market price is given by: p = 1000 − 4Q. The total cost function of each firm is C(qi) = 50 + 20qi . (a) Derive the output reaction of firm i to the belief that its rivals are jointly producing a total output of Q-i . Assuming that every firm produces the same quantity in equilibrium, use your answer to compute that quantity. (b) Suppose firms would enter (exit) this industry if the existing firms were making a profit (loss). Write down a mathematical equation, the solution to which would give you the equilibrium number of firms in this industry. You don’t have to solve this equation.arrow_forwardAOF is the only firm selling beer around Isla Vitas, which has a beer fountain in the backyard so the marginal cost of producing beer is 0. There are two groups of consumers: students and non students. The students' beer inverse demand function is p = 60 – 6q , and the non-students' beer inverse demand function is p = 10 – 2q. AOF sells beer in two sizes: 10 ounces bottle and 5 ounces can. Due to a local act, the consumers can only buy either 1 bottle or 1 can of beer. AOF can charge different prices on each bottle and each can of beer, while it cannot tell whether a customer is a student or not. In order to maximize the profits, how much should AOF charge its 10 ounces bottle? Answer: 37.5 The correct answer is: 100.0arrow_forward
- Let us consider a market where 10 firms I= {1,2,.,10} compete à la Cournot (quantity- setting competition). The inverse demand function is given by p( Q) =1200-18Q , where Q= Eiqi. The cost function is homogeneous and it is C( q ) =10q. 1.the profit functions of eachiEl is: 2.Derive the best reply functions for each firm 3.Derive the market price in the Nash equilibrium of the game. 4. The market price in the Nash equilibrium of the game is:arrow_forwardGamma and Zeta are the only two widget manufacturers in the world. Each firm has a cost function given by: C(q) = 10+20q + q^2, where q is number of widgets produced. The market demand for widgets is represented by the inverse demand equation: P = 200 - 2Q where Q = q1 + q2 is total output. Suppose that each firm maximizes its profits taking its rival's output as given (i.e. the firms behave as Cournot oligopolists). a) What will be the equilibrium quantity selected by each firm? What is the market price? What is the profit level for each firm? Equilibrium quantity for each firm__ price__ profit__ b) It occurs to the managers of Gamma and Zeta that they could do a lot better by colluding. If the two firms were to collude in a symmetric equilibrium, what would be the profit-maximizing choice of output for each firm? What is the industry price? What is the profit for each firm in this case? Equilibrium quantity for each firm__ price__ profit__ c) What minimum discount factor is required…arrow_forwardAOF is the only firm selling beer around Isla Vitas, which has a beer fountain in the backyard so the marginal cost of producing beer is 0. There are two groups of consumers: students and non students. The students' beer inverse demand function is p=50-5q, and the non-students' beer inverse demand function is p=10-2q. AOF sells beer in two sizes: 10 ounces bottle and 5 ounces can. Due to a local act, the consumers can only buy either 1 bottle or 1 can of beer. AOF can charge different prices on each bottle and each can of beer, while it cannot tell whether a customer is a student or not. In order to maximize the profits, how much should AOF charge its 10 ounces bottle? Answer: 87.5arrow_forward
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