4. Assume an industry with a cost function of c(y) = 40+2y and a demand of...
4. Assume an industry with a cost function of c(y) = 40+2y and a demand of 100−y. Assume there is an entrant and an incumbent. Assume that the incumbent announces their price before the incumbent decides to enter the industry. What is the highest price (lowest quantity) that the incumbent can offer which keep the entrant outside the market? Finally assume that if the incumbent is forbidden to make an announcement, there will be entry and both firms will adopt average cost pricing conditional on accurately anticipating the quantity their rival produces. Does it maximize social surplus to ban early announcements of prices?
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4. Assume an industry with a cost function of c(y) = 40+2y and a
demand of...
4. The demand for product X is PX = 10 − 2X – Y, where Y...
4. The demand for product X is PX = 10 − 2X – Y, where Y is the quantity of a substitute product that currently is not being produced. The marginal cost of X is a constatn equal to $1. Entry is completely barred and a monopolist, “Incubment” produces X. Find Incumbent’s price, quantity, and profit. Incumbent wishes to investigate the possibility of introducing Y, which is also protected from entry by other firms. The demand for Y is PY...
Consider a homogeneous product industry with inverse demand function p-35 -Q a) Assume that the industry...
Consider a homogeneous product industry with inverse demand function p-35 -Q a) Assume that the industry is initially monopolized by an incumbent firm (firm I) which has the exclusive right to use the state-of-the-art technology summarized by the total cost function C-10q. Find the initial monopoly equilibrium (price, quantity, industry profit, consumer surplus and total surplus) and the associated degrees of concentration (Herfindahl index) and market power (Lerner index) b) Assume now that a new firm (firm N) discovers and...
Consider a homogeneous product industry with inverse demand function p-35 -Q a) Assume that the industry...
Consider a homogeneous product industry with inverse demand function p-35 -Q a) Assume that the industry is initially monopolized by an incumbent firm (firm I) which has the exclusive right to use the state-of-the-art technology summarized by the total cost function C-10q. Find the initial monopoly equilibrium (price, quantity, industry profit, consumer surplus and total surplus) and the associated degrees of concentration (Herfindahl index) and market power (Lerner index) b) Assume now that a new firm (firm N) discovers and...
A monopolist has a cost function given by c(y) = y and faces an inverse demand...
A monopolist has a cost function given by c(y) = y and faces an inverse demand curve given by P(y) = 156.00 - y, where P is the per-unit price and y is the quantity of output sold. Assume this monopolist cannot discriminate and charges a single price. What is the profit-maximizing level of output? What is its profit-maximizing price? $ Part 2 (2 points) See Hint Assume you want to choose a price ceiling for this monopolist so as...
A monopolist who sells toys faces the following demand: P(y)=100-2y. The total cost function of the...
A monopolist who sells toys faces the following demand: P(y)=100-2y. The total cost function of the monopolist is given by: c(y)=20y+10y2 . a) Find the price and quantity that maximizes the monopolist’s profit. Also calculate the profit. [3+3] b) If the monopolist can do a perfect price discrimination, then find the consumer and producer surplus.
13. Suppose all the firms in the industry have a total cost function given by TC(y) = 9+92. What is the long run equilibrium price assuming a sufficiently high demand? Repeat the above but assume the...
13. Suppose all the firms in the industry have a total cost function given by TC(y) = 9+92. What is the long run equilibrium price assuming a sufficiently high demand? Repeat the above but assume there exists a unique (incumbent) firm with a total cost function given by TC(y)- 4 + y2. How much profit will this firm make in long run equilibrium?
13. Suppose all the firms in the industry have a total cost function given by TC(y) =...
Suppose a firm in a perfectly competitive market has the cost function c(y)=y2 + 2y +4...
Suppose a firm in a perfectly competitive market has the cost function c(y)=y2 + 2y +4 Now suppose that there is a sudden increase in demand that raises the market price to p= 8. If the demand stays at this new level, what will the long-run quantity be for each firm?
Suppose a firm with cost structure c(y)= y2 + 2y +4 is the only producer of...
Suppose a firm with cost structure c(y)= y2 + 2y +4 is the only producer of the good in the market. Market demand is given as y(p)= 40 - 2p What is the profit-maximizing quantity for this firm? Suppose a firm with cost structure c(y)= y + 2y + 4 is the only producer of the good in the market. Market demand is given as y(p)= 40 - 2p What price will the firm charge? Suppose a firm with cost...
Please help! Suppose a firm with cost structure c(y)=y^2+2y+4 is the only producer of the good in the market. Market demand is given as y(p)=40−2p What is the profit-maximizing quantity for this firm?
Suppose a firm with a cost structurec(y)=y2+2y+4is the only producer of the good in the market. Market demand is given asy(p)=40−2pWhat is the profit-maximizing quantity for this firm?
1. A firm making external hard drives has a cost function c(y) = 4y + 1000....
1. A firm making external hard drives has a cost function c(y) = 4y + 1000. Its demand function is y = 200 – 0.8p. a. Calculate the profit-maximizing price and quantity. (3 points) b. The firm decides to enter the Mexican market. It determines that its demand function in Mexico is y = 40 – p. The cost function remains the same. What price should it charge in Mexico, and what quantity should it sell? (3 points) c. Would...
Consider a homogeneous product industry with inverse demand function p-35 -Q a) Assume that the industry is initially monopolized by an incumbent firm (firm I) which has the exclusive right to use the state-of-the-art technology summarized by the total cost function C-10q. Find the initial monopoly equilibrium (price, quantity, industry profit, consumer surplus and total surplus) and the associated degrees of concentration (Herfindahl index) and market power (Lerner index) b) Assume now that a new firm (firm N) discovers and...
Consider a homogeneous product industry with inverse demand function p-35 -Q a) Assume that the industry is initially monopolized by an incumbent firm (firm I) which has the exclusive right to use the state-of-the-art technology summarized by the total cost function C-10q. Find the initial monopoly equilibrium (price, quantity, industry profit, consumer surplus and total surplus) and the associated degrees of concentration (Herfindahl index) and market power (Lerner index) b) Assume now that a new firm (firm N) discovers and...
A monopolist has a cost function given by c(y) = y and faces an inverse demand curve given by P(y) = 156.00 - y, where P is the per-unit price and y is the quantity of output sold. Assume this monopolist cannot discriminate and charges a single price. What is the profit-maximizing level of output? What is its profit-maximizing price? $ Part 2 (2 points) See Hint Assume you want to choose a price ceiling for this monopolist so as...
13. Suppose all the firms in the industry have a total cost function given by TC(y) = 9+92. What is the long run equilibrium price assuming a sufficiently high demand? Repeat the above but assume there exists a unique (incumbent) firm with a total cost function given by TC(y)- 4 + y2. How much profit will this firm make in long run equilibrium?
13. Suppose all the firms in the industry have a total cost function given by TC(y) =...
Suppose a firm in a perfectly competitive market has the cost function c(y)=y2 + 2y +4 Now suppose that there is a sudden increase in demand that raises the market price to p= 8. If the demand stays at this new level, what will the long-run quantity be for each firm?
Suppose a firm with cost structure c(y)= y2 + 2y +4 is the only producer of the good in the market. Market demand is given as y(p)= 40 - 2p What is the profit-maximizing quantity for this firm? Suppose a firm with cost structure c(y)= y + 2y + 4 is the only producer of the good in the market. Market demand is given as y(p)= 40 - 2p What price will the firm charge? Suppose a firm with cost...
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