The demand for home firm product is given by the inverse demand function: P = 120 −QD. The company’s costs are: T C = 20Q+ 200 and MC = $20. 2. Suppose the home country open up to free trade and a foreign competitor enters the market. Assume that the foreign firm has the same cost structure as the home firm (the monopoly from the previous question). A) Derive the best response function for each firm (h-home and f-foreign) B) Find each firms’ output, the home market price, and each firms’ profit from the home market

A large number of firms enter the Swedish market for the game Padel. For simplicity assume that they all act as price takers and let the cost function for each of them be given by C(q)=1000+0.4*q² where q is the number of customers served. a) In the long run free entry should drive profit to zero. At this point p=MC=ATC. Intuitively why is this the case?   b) The condition in c) implies that in a free entry equilibrium with firms that have the same cost function each firm's production will be given by the lowest point in the average total cost curve. How much does each firm produce in the free entry equilibrium? What is price in this equilibrium? (Hint: You can either differentiate the expression for average cost to determine its minimum or you can look for the minimum point using your graph in b).   c) Assume that overall demand is given by Q-1200-2*P. How many firms will there be in equilibrium?

Consider a market where two firms produce the same product, and compete by choosing the price to charge consumers. There are no capacity constraints and no fixed costs. Consumers purchase from the firm that charges the lowest price, Pmin Aggregate demand is given by Q(Pmin) = 600 – 30pmin. Both firms have marginal costs of c = 15. What is the aggregate quantity produced in this market? And what price do consumers pay? (a) p₁ = = 15, p2 = 20, Q = 150 (b) P1 = P2 = 15, Q = 150 (c) P₁ = P₂ = 20, Q = 0 (d) p₁ = 10, P2 = 15, Q = 300 (e) None of the above options is correct.

A computer hardware firm sells both laptop computers and printers. Through the magic of focus groups, their pricing team determines that they have an equal number of three types of customers, and that these customers' reservation prices are as illustrated in the figure below. Customer A Customer B Customer C and a price for printers of Laptop $750 $950 $650 Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of P= 650 P= 100 Printer $100 $50 $150 Bundle $850 $1,000 $800 (Enter your responses as whole numbers.) In turn, profit is = $ 2150 (Enter your response as a whole number.) After conducting a costly study,…