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1. Dominant firm with competitive fringe Consider a monopolist with costs MCs 2+0.1qa and ATC-2+0.059a facing...
2. Consider a dominant firm in a market with a competitive fringe. The market demand curve...
2. Consider a dominant firm in a market with a competitive fringe. The market demand curve is given by P = 100 − Q.The supply curve of the competitive fringe is perfectly elastic and given by P=Pf. The dominant firm has a marginal cost c where Pf > c (a) For what value of Pf is the presence of the competitive fringe binding on the dominant firm? (b) Suppose the dominant firm has c = 0 and the competitive fringe...
12. Consider an industry with a dominant firm and a competitive fringe. The market demand for...
12. Consider an industry with a dominant firm and a competitive fringe. The market demand for the product is given by P - 100 - 20 where P is the market price for the product, and Q is the total amount sold in the industry. The dominate firm's marginal cost is given by the equation MC-80, and the supply curve for the competitive fringe is Q-P/2. Use this information to find the Residual Demand curve faced by the dominant firm;...
The market demand curve is given by Q = 200-2p. There is one dominant firm, which sets the market...
The market demand curve is given by Q = 200-2p. There is one dominant firm, which sets the market price and has a constant marginal cost of 5, and a competitive fringe of 10 price-taking firms, each of which has a marginal cost function MC (Q) = 10 +Q. Derive the equation of the dominant firm’s residual demand curve. What price will the dominant firm set to maximize its profits? At this price, how much does the competitive fringe produce?
A big difference between a competitive firm and a monopolist is that a monopolist 1. does...
A big difference between a competitive firm and a monopolist is that a monopolist 1. does not try to maximize profits. 2. cannot set its price at the market price. 3. does not charge a price equal to marginal revenue. 4. does not set marginal revenue equal to marginal cost to maximize profits. 5. can always make positive economic profits.
Introduction to Microeconomics Deriving the Short-Run Supply Curve for the Perfectly Competitive Firm MC ATC AVC...
Introduction to Microeconomics Deriving the Short-Run Supply Curve for the Perfectly Competitive Firm MC ATC AVC Cost ($) 0 10 20 30 40 50 60 70 80 90 100 110 Outputs units) The figure illustrates the costs faced by a perfectly competitive firm. Use the figure to answer the following: 1) If the market price is $20, how much will the firm produce in order to maximize its profits? 2) If the market price is $15, how much will the...
Dumping Assume that a firm is a monopolist at Home facing the inverse-demand curve, P =...
Dumping Assume that a firm is a monopolist at Home facing the inverse-demand curve, P = 10 − Q, but is one of many competitors in the world market, where it can sell its output at a price Pw = 2. Furthermore, assume that the firm’s total cost is given by: T C (Q) = 10 + Q2 . Answer the following questions: (a) Find the optimal level of output that maximizes the firm’s total profits. Is it optimal for...
Dumping. Assume that a firm is a monopolist at Home facing the inverse-demand curve, P =...
Dumping. Assume that a firm is a monopolist at Home facing the inverse-demand curve, P = 10 − Q, but is one of many competitors in the world market, where it can sell its output at a price Pw = 2. Furthermore, assume that the firm’s total cost is given by: T C (Q) = 10 + (Q^2)/2. Answer the following questions: (a) Find the optimal level of output that maximizes the firm’s total profits. Is it optimal for the...
a) Why is a monopolistically competitive firm less efficient than a perfectly competitive firm? It produces...
a) Why is a monopolistically competitive firm less efficient than a perfectly competitive firm? It produces at an output that is lower than its minimum efficient scale (MES) It earns positive economic profits in the long run It deters entry of new firms by putting up entry barriers All of the answers are correct b) Suppose a monopolistically competitive firm has MC=4Q+5. Its demand is P=145-3Q and marginal revenue is MR=145-6Q. What is its profit-maximizing output level? 17 14 16...
Consider a market with demand curve ?=200−? and suppose that the industry consists of a dominant...
Consider a market with demand curve ?=200−? and suppose that the industry consists of a dominant firm which has a constant marginal cost equal to $40 per unit. There are ten other fringe producers; each has a marginal cost curve ??=40+10?, where q is the output of a typical fringe producer. Assume there are no fixed costs for any producer. a. What is the supply curve of the competitive fringe? b. What is the dominant firm’s residual demand curve? c....
2. In a perfectly competitive market, there are initially economic profits. Firm entry causes the...
2. In a perfectly competitive market, there are initially economic profits. Firm entry causes the market supply curve to shift rightwards, but the market does not reach its long run state. a. Draw two corresponding graphs, side-by-side, that allustrate this shift. One is the market supply and demand graph, and the other is the profit-maximizing production choice of a typical firm. Using your graph, explain b. How do price and marginal revenue change as firms enter c. How do MC...
12. Consider an industry with a dominant firm and a competitive fringe. The market demand for the product is given by P - 100 - 20 where P is the market price for the product, and Q is the total amount sold in the industry. The dominate firm's marginal cost is given by the equation MC-80, and the supply curve for the competitive fringe is Q-P/2. Use this information to find the Residual Demand curve faced by the dominant firm;...
Introduction to Microeconomics Deriving the Short-Run Supply Curve for the Perfectly Competitive Firm MC ATC AVC Cost ($) 0 10 20 30 40 50 60 70 80 90 100 110 Outputs units) The figure illustrates the costs faced by a perfectly competitive firm. Use the figure to answer the following: 1) If the market price is $20, how much will the firm produce in order to maximize its profits? 2) If the market price is $15, how much will the...
2. In a perfectly competitive market, there are initially economic profits. Firm entry causes the market supply curve to shift rightwards, but the market does not reach its long run state. a. Draw two corresponding graphs, side-by-side, that allustrate this shift. One is the market supply and demand graph, and the other is the profit-maximizing production choice of a typical firm. Using your graph, explain b. How do price and marginal revenue change as firms enter c. How do MC...
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