What will the total quantity of Motorbikes sold in the market be and what will the equilibrium price be? Represent the profit maximisation problem on a graph and indicate the price and quantity at the equilibrium. Calculate the total profit made by the two firms when they act like a monopoly. Compare it with the total profit they were making in the Stackelberg oligopoly. For the two firms to be willing to agree to act as a monopoly, how should they split the quantity to produce between them? We assume that if they do not agree to act like a monopoly, then the market structure is the Stackelberg oligopoly studied above. We further assume that no money transfer is possible between the two firms. In other words, each firm earns profit only by selling the Motorbikes that it has produced itself.
What will the total quantity of Motorbikes sold in the market be and what will the equilibrium price be? Represent the profit maximisation problem on a graph and indicate the price and quantity at the equilibrium. Calculate the total profit made by the two firms when they act like a monopoly. Compare it with the total profit they were making in the Stackelberg oligopoly. For the two firms to be willing to agree to act as a monopoly, how should they split the quantity to produce between them? We assume that if they do not agree to act like a monopoly, then the market structure is the Stackelberg oligopoly studied above. We further assume that no money transfer is possible between the two firms. In other words, each firm earns profit only by selling the Motorbikes that it has produced itself.
Chapter15: Imperfect Competition
Section: Chapter Questions
Problem 15.2P
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- Albert and Johny are the only sellers of Motorbikes in Ireland. The inverse
market demand function for motorbikes is P(Y)= 200- 2Y . Both firms have the same total cost function: T(C)= 12Y and the same marginal cost: M(C)=12. Suppose now that the two firms decide to act like a single monopolist.
- What will the total quantity of Motorbikes sold in the market be and what will the
equilibrium price be? Represent the profit maximisation problem on a graph and indicate the price and quantity at the equilibrium. - Calculate the total profit made by the two firms when they act like a
monopoly . Compare it with the total profit they were making in the Stackelberg oligopoly. - For the two firms to be willing to agree to act as a monopoly, how should they split the quantity to produce between them? We assume that if they do not agree to act like a monopoly, then the market structure is the Stackelberg oligopoly studied above. We further assume that no money transfer is possible between the two firms. In other words, each firm earns profit only by selling the Motorbikes that it has produced itself.
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