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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Chapter 12, Problem 5E
a)
To determine
To calculate:
Profit maximizing output and
b)
To determine
To calculate:
Total demand and demand for followers
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Alchem (L) is the price leader in the polyglue market. All 10 other manufacturers (follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the remainder of the demand itself. Total demand for polyglue is given by the following function (QT = QL + QF): P = 20000 - 4QT Alchem’s marginal cost function for manufacturing and selling polyglue is MCL = 5000 + 5QL The aggregate marginal cost function for the other manufacturers of polyglue is ΣMCF = 2000 + 4QF a. To maximize profits, how much polyglue should Alchem produce and what price should it charge? b. What is the total market demand for polyglue at the price established by Alchem in Part (a)? How much of total demand do the follower firms supply?
Alchem (L) is the price leader in the polyglue market. All 10 other manufacturers(follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows theother firms to sell as much as they wish at the established price and supplies theremainder of the demand itself. Total demand for polyglue is given by the followingfunction (QT = QL + QF):P ¼ 20;000 4QTAlchem’s marginal cost function for manufacturing and selling polyglue isMCL ¼ 5;000 þ 5QLThe aggregate marginal cost function for the other manufacturers of polyglue isΣMCF ¼ 2;000 þ 4QFa. To maximize profits, how much polyglue should Alchem produce and what priceshould it charge?b. What is the total market demand for polyglue at the price established by Alchemin Part (a)? How much of total demand do the follower firms supply?
Alchem (L) is the price leader in the polyglue market. All 10 other manufacturers (follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the remainder of the demand itself. Total demand for polyglue is given by the following function (QT=QL+QFQT=QL+QF):
P=10,000−4QTP=10,000−4QT
Alchem’s marginal cost function for manufacturing and selling polyglue is MCL=5,000+6QLMCL=5,000+6QL and the aggregate marginal cost function for the other manufacturers of polyglue is ΣMCF=2,000+4QFΣMCF=2,000+4QF.
To maximize profits, Alchem should produce
units and charge a price of
per unit.
What is the total market demand for polyglue at the price established by Alchem?
units.
How much of total demand do the follower firms supply?
units.
Chapter 12 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- Alchem (L) is the price leader in the polyglue market. All 10 other manufacturers (follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the remainder of the demand itself. Total demand for polyglue is given by the following function (QT = Ql+QF): P = 15,000 4QT Alchem's marginal cost function for manufacturing and selling polyglue is MCL manufacturers of polyglue is MCF : - 2,000+4QF. To maximize profits, Alchem should produce How much of total demand do the follower firms supply? = What is the total market demand for polyglue at the price established by Alchem? units and charge a price of $ units. 5,000 + 6QL and the aggregate marginal cost function for the other per unit. units.arrow_forwardAlchem (L) is the price leader in the polyglue market. All 10 other manufacturers (follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the remainder of the demand itself. Total demand for polyglue is given by the following function (Qt= QL+Qf): P= 10,000-4Qt Alchem’s marginal cost function for manufacturing and selling polyglue is MCL= 5,000+6QL and the aggreagate marginal cost function for the other manufactorers of polyglue is EMCf= 2,000+4Qf. To maximize profits, Alchem should produce units and charge a price of $ per unit. What is the total market demand for polyglue at the price established by Alchem? units. How much of total demand do the follower firms supply? units.arrow_forwardAlchem (L) is the price leader in the polyglue market. All 10 other manufacturers (follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the remainder of the demand itself. Total demand for polyglue is given by the following function (QT = QL+QF): P = 15,000-4QT Alchem's marginal cost function for manufacturing and selling polyglue is MC₁ = 5,000+6Q, and the aggregate marginal cost function for the other manufacturers of polyglue is EMCP=2,000+4QF- To maximize profits, Alchem should produce units and charge a price of S per unit. What is the total market demand for polyglue at the price established by Alchem? How much of total demand do the follower firms supply? units. units.arrow_forward
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