Question
In: Economics
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for...
Suppose a drug manufacturer sells a new drug for twitchy feet.
The market demand curve for the drug is P=105-3Q, where P is the
market price and Q is the market quantity. Also suppose the
marginal cost for manufacturing is 40/ unit.
C) Suppose the monopoly has broken up into two separate companies.
The demand function is still P=105-3Q as part A. The firms do not
collude and the firms have identical marginal cost functions
(MC1=MC2=40.). Also assume they are Cournot duopolists. Determine
the quantity and price of each firm.
Quantity for firm 1: .
Quantity for firm 2: .
Price in each market: $.
D) Now assume these firms are acting like Bertrand duopolists. What
quantity will each firm produce and what will be the market
price?
Quantity for firm 1 and 2:
Market price: $
E) Assume that firm 1 is acting as a Stackelberg leader and firm 2
is acting as the Stackelberg follower. The demand function is still
P=105-3Q as part A. The firms do not collude and the firms have
identical marginal cost functions (MC1=MC2=40). Determine:
(a) the demand function faced by the leader: .
(b) the quantity produced by the leader: .
(c) the quantity produced by the follower: and
(d) market price:
Solutions
Rahul Sunny answered 8 months agoRelated Solutions
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for...
Suppose a drug manufacturer sells a new drug for twitchy feet.
The market demand curve for the drug is P=105-3Q, where P is the
market price and Q is the market quantity. Also suppose the
marginal cost for manufacturing is 40/ unit.
A) Assuming the firm is an unregulated monopolist, what quantity
and price should the firm offer?
Quantity =.
Price = $
B) Now suppose, the manufacturer has identified two separate
classifications of customers for their twitchy feet product....
Suppose a drug manufacturer sells a new drug for twitchy feet. The market demand curve for...
Suppose a drug manufacturer sells a new drug for twitchy feet.
The market demand curve for the drug is P=105-3Q, where P is the
market price and Q is the market quantity. Also suppose the
marginal cost for manufacturing is 40/ unit.
C) Suppose the monopoly has broken up into two separate
companies. The demand function is still P=105-3Q as part A. The
firms do not collude and the firms have identical marginal cost
functions (MC1=MC2=40.). Also assume they are...
A medical device manufacturer sells its sterilization equipment in a market with an inverse demand curve of P = 6,000 – 400Q
A medical device manufacturer sells its sterilization
equipment in a market with an inverse demand curve of P = 6,000 –
400Q, where Q measures the number of sterilizers in thousands and P
is the price per unit. The marginal cost of production is constant
at $4,000. a. Solve for the profit-maximizing price and quantity.
b. The Patient Protection and Affordable Care Act signed into law
by President Barack Obama levies a tax on medical devices. Suppose
the tax raises...
Suppose that in a particular market, the demand curve is highly elastic, and the supply curve...
Suppose that in a particular market, the demand curve is highly
elastic, and the supply curve is highly inelastic. If a tax is
imposed in this market, then the
Question 25 options:
buyers will bear a greater burden of the tax than the
sellers.
sellers will bear a greater burden of the tax than the
buyers.
buyers and sellers are likely to share the burden of the tax
equally.
buyers and sellers will not share the burden equally, but it...
Suppose the demand curve and the supply curve in a market are both linear. To begin,...
Suppose the demand curve and the supply curve in a market are
both linear. To begin, there was a $5 tax per unit, and the $5 tax
resulted in a deadweight loss of $1,500. Now, the tax per unit is
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$6,000. What is the amount of the new tax per unit?
Question1 Suppose there is a market for heroin in Eugene. The demand curve for heroin is...
Question1 Suppose there is a market for heroin in Eugene. The
demand curve for heroin is 140-2Q. The marginal cost of heroin is
$4. What is the competitive market price?
Question2 What is the competitive market
quantity?
Question3 What is the price if a single monopoly firm
enters the market?
Question4
Suppose 1 person overdoses for every 2 units of heroin
purchased. How many more people overdose in a competitive market
than in a monopoly market?
Can you solve those questions...
Suppose there are two firms in an instant coffee market. Market demand curve is given by...
Suppose there are two firms in an instant coffee market. Market
demand curve is given by P = 100 – 2Q, and marginal cost of
production for both firms are equal and constant at m=12.
a) Find the output that will maximize firm’s profit if the two
firms choose price simultaneously. What is the price that the firm
will charge and how much is the profit of each firm?
b) Find the output that will maximize firm’s profit if two...
Suppose there are two firms in an instant coffee market. Market demand curve is given by...
Suppose there are two firms in an instant coffee market. Market
demand curve is given by P = 100 – 2Q, and marginal cost of
production for both firms are equal and constant at m=12.
a) Find the output that will maximize firm’s profit if the two
firms choose price simultaneously. What is the price that the firm
will charge and how much is the profit of each firm? ( 10
marks)
b) Find the output that will maximize firm’s...
Suppose there are two firms in an instant coffee market. Market demand curve is given by...
Suppose there are two firms in an instant coffee market. Market
demand curve is given by P = 100 – 2Q, and marginal cost of
production for both firms are equal and constant at m=12.
a) Find the output that will maximize firm’s profit if two firms
choose quantity simultaneously. What is the price that they will
charge and how much is the profit of each firm?
b) Suppose the quantity game as in (b) is played by the firm...
Suppose one market has a demand curve ?(?) = 100 − ?? （1）If this market has...
Suppose one market has a demand curve ?(?) = 100 − ??
（1）If this market has many firms supplying the identical
products to the consumers, and the industry has a cost function
?(?) = 2? ^2. What are the market equilibrium price and
quantity?
（2）What is the price elasticity of demand at the market
equilibrium in (1)?
（3）If this market has only one firm supplying the products, with
cost function ?(?) = 2?^2. What are the market equilibrium price
and...
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