INFO FROM PREVIOUS QUESTION ALREADY ANSWERED PLEASE ANSWER 5:
4. Suppose Chipco produces memory chips for hand-held devices such as tablets and phones. Total costs in the short-run can be described with the following formula:
TC = 300 + 5Q + 0.1(Q2)
where Q is the number of chips produced per week and TC is the total cost of chips.
5. Refer to question 4, referring to Chipco. Now suppose Chipco has a patent that allows it to hold a monopoly position in the making of these chips. Demand for the chips is below: Now suppose Chipco has a patent that allows it to hold a monopoly position in the making of these chips. Demand for the chips is below:
P |
q |
120 |
0 |
115 |
10 |
110 |
20 |
105 |
30 |
100 |
40 |
95 |
50 |
90 |
60 |
85 |
70 |
80 |
80 |
75 |
90 |
70 |
100 |
65 |
110 |
a. What is the profit-maximizing price and quantity of chips? What is the profit?
b. Use a graph to show the general situation, including profit-maximizing quantity and price, and the profit box.
c. Disregard a and b. Suppose there are six drug firms producing a transplant anti-rejection drug . Sales of each firm are 30m, 25m, 22m, 10m, 8m, and 5m. Calculate the 4-firm concentration ratio and Herfindahl index for this industry. If the second and third largest firms merge, what is the new CR4 and H? If the increase in H is greater than 100 and the post-merger H is greater than 2500, the merger is likely to be challenged by the FTC. Will the challenge likely occur?
d. Suppose drugs that treat blood disorders can be altered to perform a similar anti-rejection function for transplants. How might that affect our final answer for part c? Explain.
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