Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q -----------------------------(1) - Firm B TC = 10 + 2Q -------------------------(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. Question : Use the information given about firm A above and use appropriate diagrams/figures to explain how the equilibrium will change if it’s cost of production rises to $5?
Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q -----------------------------(1) - Firm B TC = 10 + 2Q -------------------------(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. Question : Use the information given about firm A above and use appropriate diagrams/figures to explain how the equilibrium will change if it’s cost of production rises to $5?
Chapter9: Monopolistic Competition And Oligoply
Section: Chapter Questions
Problem 18SQ
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Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms:
- Firm A: TC = 2Q -----------------------------(1)
- Firm B TC = 10 + 2Q -------------------------(2)
Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000.
Question : Use the information given about firm A above and use appropriate diagrams/figures to explain how the equilibrium will change if it’s cost of production rises to $5?
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