Question

Suppose that the (inverse) demand curve for Ginseng is given by P = 400 − 6Q and TC = $4Q + $3Q2

What are four conditions required for a competitive market? 4 Points

What is equilibrium Price and Quantity and Profit if the market is competitive? 4 Points

What is equilibrium Price and Quantity and Profit if there are two firms in the market (note Q = q1 + q2)? 5 Points

What is equilibrium Price and Quantity and Profit if there are monopoly in the market (note Q = Q)? 5 Points

If there were 3 firms, where do you estimate the output and the price would be—this does not require a mathematical calculation—it is based on the expectations created by the prior three answers (1-b, 1-c, and 1-d). 2 Points

Answer #1

Suppose that the (inverse) demand curve for Cranberries is given
by P = 40 − 6Q and TC = $4Q + $3Q2
What is equilibrium Price and Quantity and Profit if the market
is competitive? 4 Points
What is equilibrium Price and Quantity and Profit if there are
two firms in the market (note Q = q1 + q2)? 5
Points
What is equilibrium Price and Quantity and Profit if there are
monopoly in the market (note Q = Q)?...

Consider two identical firms competing in a market described
by:
• (Inverse) Demand: P = 50 − Q , where Q = q1 + q2
• Cost Firm 1: C1 = 20q1 +q1^2
• Cost Firm 2: C2 = 20q2 + q2^2
a. (1 point) What is firm 1’s marginal cost? Firm 2’s marginal
cost? What can you observe about these two firms?
b.(2 points) What are the equilibrium price (P∗), production
quantities (q∗1,q∗2), and profits(π∗1,π∗2), if these firms are...

Suppose duopolists face the market inverse demand curve P = 100
- Q, Q = q1 + q2, and both firms have a constant marginal cost of
10 and no fixed costs. If firm 1 is a Stackelberg leader and firm
2's best response function is q2 = (100 - q1)/2, at the
Nash-Stackelberg equilibrium firm 1's profit is $Answer

Consider a Cournot market with two firms that have TC(Q) =5Q.
Demand is given by P= 200−2(Q1+Q2).
A) Find firm 1’s profit as a function of Q1 and Q2
B) Find the equilibrium price, quantity sold by each firm, and
profit for each firm.

Consider two identical firms competing in a market described
by:
• (Inverse) Demand: P = 50 − Q , where Q = q1 + q2
• Cost Firm 1: C1 = 20q1 +q1^2
• Cost Firm 2: C2 = 20q2 + q2^2
a. (1 point) What is firm 1’s marginal cost? Firm 2’s marginal
cost? What can you observe about these two firms?
b.(2 points) What are the equilibrium price (P∗), production
quantities (q∗1,q∗2), and profits(π∗1,π∗2), if these firms are...

1) The inverse demand curve a monopoly faces
is
p=110−2Q.
The firm's cost curve is
C(Q)=30+6Q.
What is the profit-maximizing solution?
2) The inverse demand curve a monopoly faces
is
p=10Q-1/2
The firm's cost curve is
C(Q)=5Q.
What is the profit-maximizing solution?
3) Suppose that the inverse demand function for
a monopolist's product is
p = 7 - Q/20
Its cost function is
C = 8 + 14Q - 4Q2 + 2Q3/3
Marginal revenue equals marginal cost when output
equals...

The inverse market demand is P=175 – 6Q. There are 2 plants with
cost functions
TC1 = 15+6q1+q1²
TC2 = 18+2q2+2q2²
a. Determine the single plant monopoly profit-maximizing output.
(Assume plant 2 is closed then assume plant 1 is closed.)

The market demand function for a good is given by Q = D(p) = 800
− 50p. For each firm that produces the good the total cost function
is TC(Q) = 4Q+ Q^2/2 . Recall that this means that the marginal
cost is MC(Q) = 4 + Q. Assume that firms are price takers.
(a) What is the efficient scale of production and the minimum of
average cost for each firm? Hint: Graph the average cost curve
first.
(b) What...

2. The market for a good has an inverse demand curve of p = 40 –
Q and the costs of producing the good are defined by the following
total cost function: TC = 100 + 1.5Q2.
a. If this good is produced in a monopoly market, provide a
graph of the demand curve, marginal revenue curve and marginal cost
curve. Then calculate the equilibrium output and price .
b. Calculate the price elasticity of demand at the equilibrium
price...

2. The market for a good has an inverse demand curve of p = 40 –
Q and the costs of producing the good are defined by the following
total cost function: TC = 100 + 1.5Q2.
a. If this good is produced in a monopoly market, provide a
graph of the demand curve, marginal revenue curve and marginal cost
curve. Then calculate the equilibrium output and price.
b. Calculate the price elasticity of demand at the equilibrium
price and...

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