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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Two Bistro restaurants, Bistro 1 and Bistro 2, have
Instructions: Use no decimals. Use the average cost to calculate
Complete the following table.
P1 |
P2 |
Q1 |
Q2 |
Profits Bistro 1 |
Profits Bistro 2 |
|
Duopoly competition |
|
|
|
|
|
|
Collusion |
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- Please answer question d, e and farrow_forwardThere are two ice-cream parols on a beach. The dayly demand for ice-creams is given by Q = 3079 - 3p. The average variable cost of an ice-cream is 70, while the rent of the place is 966. How many ice-creams is the 'Leader' company selling if the two ice-cream stands operate as Stackelberg duopolists? (Please use 2 decimals in your answer.)arrow_forwardDo not use Aiarrow_forward
- (b) Consider two firms, 1 and 2 , operating in a monopolistic competitive market. The cost functions of the firms are: TC_(1)=20+20 Q and TC_(2)=80+80Q, respectively. Would it be rational for both firms to compete in the world market, given the market demand curve of Q=100-P, and they have to bear a trade cost of $30 per unit? Explain with the help of a diagram. please give answer with compleete steps and diagram.arrow_forwardThere are two firms, Firm 1 and Firm 2. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Q1) = 10 + 4Q1 and C(Q2) = 12 + 16Q2, and the market demand curve for product is given by P = 50 – 4Q. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round values if used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 Duopoly competition Collusionarrow_forwardThe inverse demand function in an industry with two firms is given as p = 50 – 2y, where y is the industry demand and p is the price. The firms have different technologies at their production plants with costs given as c(y1) = 10y, and c2[y2) = 14y2, where y = y,+ y2. 1. If the firms merge into one firm and become a monopoly in the industry, what will be the output of the merged firm? Comment on what would happen to the production plants under one ownership. Find the equilibrium price and profit. 2. Compare and comment on the total industry profits in these three market structures. 3. Assuming the firms are Bertrand duopolists, what is likely to happen? Explain verbally (no need to solve the problem).arrow_forward
- Problem 2.3. Monopoly with increasing marginal cost (15 points) A firm with cost function 2 CQ Q () 0.50 = is a monopoly in a market where the inverse demand function is pQ Q ( ) 120 2 = - . (a) Find the monopolist's marginal revenue and marginal cost. (b) Find the monopolist's profit- maximizing quantity and price Update: C(q)=.5q^2 and P(q)=120-2qarrow_forwardThe demand function in a duopoly market is P(Q) = 300-0.3Q, where P is the price and Q is the total quantity demanded. Both companies have the same constant marginal cost, What is the deadweight loss if both companies maximize their profits and they are not allowed to cooperate? (MR is not MC since its not monopoly)arrow_forwardAnswer multiple choicearrow_forward
- (a) Consider a monopoly trading firm that dominates a particular market. Describe the factors that contribute to the monopoly's ability to control prices and generate profits and as such discuss its short run and long run profit situation. Use relevant diagrams to support your answer.(b) Suppose more firms are interested in joining the market and over the years, the market structure is characterised by monopolistic competition. Discuss the implication on the firm's short-run and long run profits. Use relevant diagrams to support your answer.arrow_forwardIn a monopolistically competitive industry, a firm has a short-run and long-run cost function C = 150 + 20Q + 5Q2 The demand function for the firm's product is Q = α – P. (C = cost, Q = quantity, P = price, α = parameter). (i) If α = 116 short, determine the quantity, the price and profit of the business. (ii) What is the firm's demand function at long term equilibrium? MAKE A GRAPHarrow_forwardHand written solutions are strictly prohibitedarrow_forward
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