Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Question
Chapter 12, Problem 3E
a)
To determine
To calculate: The optimum output and the selling price for each firm.
b)
To determine
To calculate: The total profits for each firm and total industry at optimal solution
c)
To determine
To find: Marginal cost of the two firms are equal at the optimal solution
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Students have asked these similar questions
Consider two price-setting oligopolies supplying consumers in a certain region of a
country. Firm 1 employs many of the people living there and the local government subsidizes
its operations. In all other respects, the firms are identical-they have the same constant
marginal cost, MC = 4, and produce the same good. The demand function for Firm 1 is q1 =
600 - 50p1 - 20p2 and for Firm 2 is q2 = 600 - 50p2 - 20p1, where p1 is Firm 1's price and p2 is
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a. What are the Nash-Bertrand equilibrium prices and quantities without the subsidy?
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Consider a hypothetical demand schedule for monosodium glutamate (MSG). Suppose that Ajinomoto holds 50% of the market, Jiali holds 30% of the market, and Quingdao holds 20% of the market.
Suppose the three firms agree to form a cartel to fix production of monosodium glutamate. Assume marginal cost equals zero, and the output is split equally across the firms.
Price of MSG ($ per pound)
Quantity of MSG demanded (millions of pounds)
$8
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$5
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$4
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$3
90
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$1
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b.90 million pounds
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d.20 million pounds
Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero.
How would this affect the incentive of Ajinimoto to act noncooperatively and change its output?
a.Ajinomoto will have an incentive to increase its output of MSG.
b.Ajinomoto will not have an incentive to change its…
Market demand for widgets is p = 160 - 2Q. Whether there is just one firm selling widgets or many firms selling widgets, the marginal cost and average cost is 100.Assume there are two firms selling widgets acting as Stackelberg duopolists, with Firm 1 moving first and Firm 2 following. Further assume that Firm 1's marginal profit function at its maximum is Mπ(q1) = 75 - q1, where q1 is the amount of widgets sold by Firm 1. What is the quantity sold for each firm?Options are:Firm 1 sells 0 Firms 2 sells 80Firm 1 sells 25 firm 2 sells 64.5Firm 1 sells 15, Firm 2 sells 30Firm 1 sells 7.5 Firm 2 sells 15From question 12 (Stackelberg duopolists), what is the price of widgets?Options are:1501158565
Chapter 12 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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