Question
In: Economics
Suppose that market demand can be represented as p = 100 - 3Q. There are 10...
Suppose that market demand can be represented as p = 100 - 3Q. There are 10 identical firms producing an undifferentiated product, each with the marginal cost function MC = 3q. If the firms form a cartel, the marginal revenue for the cartel is MR = 100 - 6Q. Compare the competitive outcome with the cartel outcome. What is the individual firm's incentive to cheat on the cartel? (show the procedure you reach your conclusion)
Solutions
Rahul Sunny answered 8 months agoRelated Solutions
Suppose that the market demand is: P = 24 – 3Q, where P is price and...
Suppose that the market demand is: P = 24 – 3Q, where P is price
and Q is quantity demanded, and marginal revenue is: MR = 24 –
6Q.
The marginal cost is: MC = 6 and total fixed cost is 0.
a. If the market structure is monopoly, determine the profit
maximizing price and output for this monopolist and calculate its
economic profit or loss at the profit maximizing output.
b. If the market structure is perfect competition, determine...
Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes...
Suppose that a firm faces the demand curve, P = 100 - 3Q, where
P denotes price in dollars and Q denotes total unit sales. The cost
equation is TC = 200 + 22Q.
a. Determine the firm’s profit-maximizing output and
price.
b. Suppose that there is a change in the production process so
that the cost equation becomes TC = 80 + 12Q + Q2.
Determine the resulting effect on the firm’s
output:
c. Using the two...
Suppose that the market demand is: P = 24 – 3Q, and marginal revenue is: MR...
Suppose that the market demand is: P = 24 – 3Q, and marginal
revenue is: MR = 24 – 6Q. The marginal cost is: MC = 6 and fixed
cost is 0.
a. If the market structure is monopoly, determine the profit
maximizing price and output for this monopolist and calculate its
economic profit or loss at the profit maximizing output.
b. If the market structure is perfect competition, determine the
profit maximizing price and total output and calculate a...
Consider the market for oil in Staubovia. Domestic demand for oil can be represented by P=100-2QDanddomestic...
Consider the market for oil in Staubovia. Domestic demand for
oil can be represented by P=100-2QDanddomestic supply of oil can be
represented by P=25+3QS, where Q is measured in millions of
barrels. (2 graphs)
a .Calculate the equilibrium price and quantity, showing all
necessary work. Graph the market for oil on graph 1, being sure to
properly label axes, curves, intercepts, and equilibrium.
Suppose that Staubovia imports oil, and that the world price for
oil is $40 per barrel
b....
1. Suppose a market is described by demand P = 100 - 2Q and there are...
1. Suppose a market is described by demand P = 100 - 2Q and
there are two firms engaged in Stackelberg Competition each with a
MC = 10 What is the consumer surplus in this market (Round market
output to the nearest integer)?
1. 828
2. 1916
3. 1156
4. 1811
Assume a monopolist faces a market demand curve P = 190 - 3Q and has the...
Assume a monopolist faces a market demand curve
P = 190
- 3Q and has the
short-run total cost function C
= 540
+ 10Q. What is the
profit-maximizing level of output? What are profits? Graph the
marginal revenue, marginal cost, and demand curves, and show the
area that represents deadweight loss on the graph. (Hint: derive
the MR and MC functions and set MC=MR and solve).
In Question 3 above, what would price and output be if the firm...
Suppose the market demand for cigarettes is: QD = 10 − P, and the supply of...
Suppose the market demand for cigarettes is: QD = 10 − P, and
the supply of cigarettes is: QS = −2 + P, where P is the price per
pack of cigarettes a. Graph the supply and demand curves. b. What
is the equilibrium price and quantity sold of cigarettes? Show this
on the graph. If the government imposes a cigarette tax of $1 per
pack, c. What is the price paid by consumers? d. What is the price
faced...
Suppose the market demand is QD = 200−P and market supply is QS = 4P−100. A....
Suppose the market demand is QD = 200−P and market supply is QS
= 4P−100.
A. Suppose the government imposes a tax of t = 5 on producers.
What is the incidence of the tax on consumers? Producers?
B. What is the deadweight loss of the tax?
Assume that demand for a commodity is represented by the equation P = 10 – 0.2...
Assume that demand for a commodity is represented by the
equation P = 10 – 0.2 Q d, and supply by the equation P = 5+ 0.2 Qs
where Qd and Q s are quantity demanded and quantity supplied,
respectively, and P is the Price. Use the equilibrium condition Qs
= Qd a. Solve the equations to determine equilibrium price b. Now
determine the equilibrium quantity c. Graph the two equations to
substantiate your answers and label these two graphs...
Assume that demand for a commodity is represented by the equation P = 10 – 0.2...
Assume that demand for a commodity is represented by the
equation P = 10 – 0.2 Qd, and supply by the equation P = 5 + 0.2 Qs
where Qd and Q s are quantity demanded and quantity supplied,
respectively, and P is the Price. Use the equilibrium condition Qs
= Qd , 1: Solve the equations to determine equilibrium price. 2:
Now determine equilibrium quantity. 3: Graph the two equations to
substantiate your answers and label these two graphs...
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