Perfectly Competitive market vs duopoly market Suppose the daily demand function of pizza in St Catherines Q^d=2175-5p. For 1 pizza store, the variable cost of making Qpizza per day is C(q)=0.2q^2 – 5q there is a 2000$ fixed cost. There is free entry in the long run a) What is the long run market equilibrium price and quantity in this market? How many firms in the market b) If the marginal cost decreased by 2$ per pizza what is the new short run market equilibrium price and quantity. c) Draw graphs to show the short run and the long run responses of both an individual firm and the market in part b.

Perfectly Competitive market vs duopoly market Suppose the daily demand function of pizza in St Catherines Q^d=2175-5p. For 1 pizza store, the variable cost of making Qpizza per day is C(q)=0.2q^2 – 5q there is a 2000$ fixed cost. There is free entry in the long run a) What is the long run market equilibrium price and quantity in this market? How many firms in the market b) If the marginal cost decreased by 2$ per pizza what is the new short run market equilibrium price and quantity. c) Draw graphs to show the short run and the long run responses of both an individual firm and the market in part b.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 9E

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Questions Perfectly Competitive market vs duopoly market Suppose the daily demand function of pizza in St Catherines Q^d=2175-5p. For 1 pizza store, the variable cost of making Qpizza per day is C(q)=0.2q^2 - 5q there is a 2000$ fixed cost. There is free entry in the long run a) What is the long run market equilibrium price and quantity in this market? How many firms in the market b) If the marginal cost decreased by 2$ per pizza what is the new short run market equilibrium price and quantity. c) Draw graphs to show the short run and the long run responses of both an individual firm and the market in part b. Now assume the market demand function does not change, consider duopoly market in which the marginal cost of each firm is 35. d) What is the nash equilibrium price and quantity in this Stackelberg model.
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On the following graph, use the orange points (square symbol) to plot points along the portion of the firm's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot the points in order from left to right, starting with the point closest to the origin. You are given more points to plot than you need.) PRICE (Dollars per lamp) 100 8 8 70 50 30 20 10 0 PRICE (Dollars per lamp) 90 Suppose there are 5 firms in this industry, each of which has the cost curves previously shown. 100 Demand 80 10 70 20 30 50 60 70 QUANTITY (Thousands of lamps) On the following graph, use the orange points (square symbol) to plot points along the portion of the industry's short-run supply curve that corresponds to prices where there is positive output. (Note: For the graphing tool to grade correctly, you must plot these points in order from left to right, starting with the point closest to the origin. You are given more…