Question

Suppose a cartel is made of 2 firms and it's aggregate
market demand curve which faces the whole cartel is given by: Q :
5,00,000-10,000 P . The cartel

knows by some estimate that its profit-maximizing price is Rs. 40
per unit. The two firms face the following MC functions:

MCI : 7 + .OOIQI MC2 : 16.6 + .O002Q2

Q. (a) What is the MR of the cartel at the profit-maximizing
output? (b) What is the quantity allotted to each firm? Show all
calculations.

Answer #1

A monopolist faces the following demand curve, marginal
revenue curve, total cost curve and marginal cost curve for its
product: Q = 200 - 2P
MR = 100 - Q
TC = 5Q MC = 5
a. What is the profit maximizing level of output?
b. What is the profit maximizing price? c. How much profit
does the monopolist earn?

No scan of handwritten answers
1. A monopolist faces a market demand curve given by Q = 53- P.
Its cost function is given by C = 5Q + 50, i.e. its MC =$5.
(a) Calculate the profit-maximizing price and quantity for this
monopolist. Also calculate its optimal profit.
(b) Suppose a second firm enters the market. Let q1
be the output of the first firm and q2 be the output of
the second. There is no change in market...

Firms A and B operate as a centralized cartel. Their marginal
cost functions are defined below:
MCA = 2000 + 25QA
MCB = 2000 + 6.25QB
The firms face the following market demand curve: Q = 1000 –
0.05P
Determine the market price that the firms should charge and the
quantity of output that should be produced by each firm.

Suppose there are 2 firms in a market. They face an aggregate
demand curve, P=400-.75Q. Each firm has a Cost Function, TC=750+4q
(MC=4). a. If the 2 firms could effectively collude, how much would
each firm produce? What is aggregate output? What is price? What
are the profits for each firm? Provide a graph illustrating your
answer. b. Suppose instead that the firms compete in Quantity
(Cournot Competition). Calculate each firm's best-response function
using the formulae provided in the book....

Suppose a firms MR = 12-2Q. Further, suppose that the firm’s MC
= 2. What is the profit maximizing quantity (Q)? Show all your work
and, most importantly, explain why your technique will lead to the
profit maximizing output level

A market has a demand function of Q = 160 - 2p
and four firms, each of which has a constant marginal cost of
MC = 20. If the firms form a profit-maximizing cartel and
agree to operate subject to the constraint that each firm will
produce the same output level, how much does each firm produce?

A monopolist faces a demand curve given by P=40-Q, while its
marginal cost is given by MC=4+Q. Its profit maximizing output
is
a. 8 b. 9
c. 10 d.
11 e. 12
why is the answer (e)?

Suppose there is a perfectly competitive industry in Dubai,
where all the firms are identical. All the firms in the industry
sell their products at 20 AED. The market demand for this product
is given by the equation: (Total marks = 5)
Q = 25 – 0.25P
Furthermore, suppose that a
representative firm’s total cost is given by the equation:
TC = 50 +4Q +
2Q2
What is the inverse demand function for this market?
Calculate the MC function?
Calculate...

A monopoly firm faces a demand curve given by the
following equation: P = $500 - 10Q, where Q equals quantity sold
per day. It's marginal cost curve is MC = $100 per day. Assume that
the firm faces no fixed cost. Provide an explanation of the
results.
How much will the firm produce?
How much will it charge?
Can you determine its profit per day?
Suppose a tax of $1000 per day is imposed on the firm? How will...

Part A
A demand curve is P = 10- Q. So its MR is
A)5-2Q
B)10- 4Q
C)10 - Q
D)10 -2Q
Part B
A non- competitive firm's demand curve is P = 10- 2Q. So its MR
is
A)5-2Q
B)10- 4Q
C)10 - Q
D)5 - Q
Part C
"If a firm with pricing power in the market faces a demand curve
of P = 1800-2Q and marginal costs of MC = 200, how much is the
equilibrium (profit...

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