The demand function for an oligopolistic market is given by the equation, Q = 275 – 4P, where Q is quantity demanded and P is price (Note: inverse demand for the dominant firm here is P = 50 - .2Q). The industry has one dominant firm whose marginal cost function is: MC = 12 + 0.7QD, and many small firms, with a total supply function: QS = 25 + P. In equilibrium, the total output of all small firms is
Demand function for the market is Q = 275 - 4P.
Supply function of fringe is Q = 25 + P.
This gives residual demand function Qd = 275 - 4P - 25 - P or Qd = 250 - 5P.
This implies inverse demand function is P = 50 - 0.2Q
and MR = 50 - 0.4Q. MC is 12 + 0.7Q.
Hence we have MR = MC or 50 - 0.4Q = 12 + 0.7Q.
This gives Q = 38/1.1 = 34.55 units and P = 50 - 0.2*34.55 = $43.09.
Hence, total output of all small firms is Q = 25 + 43.09 = 68.09 units
The demand function for an oligopolistic market is given by the equation, Q = 275 – 4P, where Q is quantity demanded and P is price (Note: inverse demand for the dominant firm here is P = 50 - .2Q). T...
The demand function for an oligopolistic market is given by the equation, Q = 275 – 4P, where Q is quantity demanded and P is price (Note: inverse demand for the dominant firm here is P = 50 - .2Q). The industry has one dominant firm whose marginal cost function is: MC = 12 + 1.2QD, and many small firms, with a total supply function: QS = 25 + P. In equilibrium, the total output of all small firms is...
2. (15 points). The demand function for an oligopolistic market is given by the equation, Q 180-4P, where Q is quantity demanded and P is price. The industry has one dominant firm whose marginal cost function is: MC 12+1Qp, and many small firms, with a total supply function: Qs 20+ P. (a) Derive the demand equation for the dominant oligopoly firm. (b) Determine the dominant oligopoly firm's profit-maximizing out- put and price. (c) Determine the total output of the small...
In a monopolistic competitive market for blood pressure monitor, suppose the market demand function for the monitor is P=160 – 3Q, where P is the price for monitor, Q and the quantity of monitor demanded. Marginal cost of producing it is MC: P = 20 + Q, where P is the price of the monitor and Q is the quantity of the monitor sold. Use the Twice as Steep Rule, form the marginal revenue function. What are the price and...
Suppose that the (inverse) market demand function for wax paper is P=400-2Q where Q is total industry output. There are only two firms, Firm1 and Firm 2, that produce wax paper. Thus, Q=q1+q2. Each firm has no fixed cost but a constant marginal cost of production equals $40. (a) Suppose that the two firms decide to form a cartel. Calculate the output quantity for Firm 1 (b) Suppose that the two firms decide to form a cartel. Calculate the profit...
Inverse demand function is given as P=$100,000 - 52.5Qd, where Qd is the annual quantity demanded. development costs were substantial and marginal costs for a treatment are "just" $750 per treatment. a) if you set a single price to maximize profits, what quantity will you supply annually? (hint: the marginal revenue function has the same y-axis intercept as the inverse demand function, but twice the slope. set MR=MC and solve for Q) b) what is the price for treatment (hint:...
Suppose demand for wind turbines is Q = 110-3P, where P is the price. The dominant producer in this industry is “Winnie’s Wind Turbines”. There are also a number of small price-taking firms that can be represented by the supply function S(P)=P-10. The marginal cost of production for the dominant firm is given by mcd=10 and the total cost function is given by 10qd. What quantity would Winnie’s Wind Turbines supply in the wind turbine market? What would be the...
Two firms in an industry engaged in Bertrand competition. The industry inverse demand function is p = 40 - 2Q, and marginal cost is MC = 10 for both firms. No firm faces capacity constraints. Find the BertrandNash equilibrium (prices, quantities, profits consumer surplus, total surplus, herfindahl index and lerner index)
3. Suppose XYZ Company is a dominant firm in a particular industry. The demand curve for this industry’s product is ? = 200 − 10?, where Q is the quantity demanded and P is the price. The supply curve for the small firms in the industry is ?? = 20 + 2?, where ?? is the total amount supplied by all the small firms combined. XYZ Company’s marginal cost is ?? = 2??, where ?? is XYZ Company’s output. Question:...
A monopolist’s inverse demand is P=500-2Q, the total cost function is TC=50Q2 + 1000Q and Marginal cost is MC=100Q+100, where Q is thousands of units. a). what price would the monopolist charge to maximize profits and how many units will the monopolist sell? (hint, recall that the slope of the MARGINAL Revenue is twice as steep as the inverse demand curve. b). at the profit-maximizing price, how much profit would the monopolist earn? c). find consumer surplus and Producer surplus...
Please be descriptive. The inverse market demand curve for bean sprouts is given by P(Q) 100 2Q, and the marginal cost for any firm in the industry is $4. (a) (10 points) If the bean-sprout industry were perfectly competitive, what would be the industry output and the industry price? be the industry output would and the market price? as a follower. What would be the industry output would and the market price? (b) (20 points) If the firms were operating...