Price is set in a market by a dominant firm price leader (L = Leader). Total Market Demand is P = 10,000-5*QT. QT= 2,000 - .20*P. The dominant firm’s total cost is TCL= 50*QL + 1.5*QL2. The dominant firm’s Quantity Demanded is QL= QT – QF. The competitive fringe supply is SF= PL = 50 + 2QF; QF = -25 + .5*P. Profit maximizing price set by the dominant firm will be
Price is set in a market by a dominant firm price leader (L = Leader). Total Market Demand is P = 10,000-5*QT. QT= 2,000 - .20*P. The dominant firm’s total cost is TCL= 50*QL + 1.5*QL2. The dominant firm’s Quantity Demanded is QL= QT – QF. The competitive fringe supply is SF= PL = 50 + 2QF; QF = -25 + .5*P. Profit maximizing price set by the dominant firm will be
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Total Market
P = 10,000-5*QT.
QT= 2,000 - .20*P.
The dominant firm’s total cost is
TCL= 50*QL + 1.5*QL2.
The dominant firm’s Quantity Demanded is
QL= QT – QF.
The competitive fringe supply is
SF= PL = 50 + 2QF;
QF = -25 + .5*P.
Profit maximizing price set by the dominant firm will be
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