Question

In: Economics

The demand curve for karate training in a community with only two martial arts schools is...

The demand curve for karate training in a community with only two martial arts schools is P = 100 – Q, where Q is in student-lessons. The cost of providing an additional student-lesson is $8/lesson. Complete the table below for the four cases described in a-d. There are no fixed costs.

a) Both schools get together and collude to price fix at a profit maximizing level.

b) Both schools assume that the other will hold the present tuition constant despite what the competition does.

c) Both schools assume that the other will hold the present enrollment constant despite what the competition does.

d) School 1 believes school 2 will adjust to its new profit maximizing solution each time school 1 adjusts its enrollment strategy. (Show calculations below.)

Q of School 1 Q of School 2 Price ($/lesson) Profit of School 1 Profit of School 2
A
B
C
D

Solutions

Expert Solution


Related Solutions

Bay State Community College enrolls students in two departments, Liberal Arts and Sciences. The college also...
Bay State Community College enrolls students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of these two service departments’ output for the year is as follows: Provider of Service      User of Service Library Computing Services   Library — 10 %   Computing Services — —   Liberal Arts 80 % 20 %   Sciences 20 % 70 % The budgeted costs in the two service departments for the...
What does a demand curve illustrate? What will cause a demand curve to shift? Provide two...
What does a demand curve illustrate? What will cause a demand curve to shift? Provide two examples from the automobile market where the demand for automobiles expands. What are the determinants of supply? Provide three examples from the market for automobiles where the supply of automobiles will contract (shift left). How are the markets for automobiles and gasoline related? What would happen to the market for automobiles if the consumer price of gasoline rose? Explain the term Opportunity Cost. What...
An increase in the number of consumers: shifts the demand curve rightward. results only in a...
An increase in the number of consumers: shifts the demand curve rightward. results only in a movement along the demand curve. Both answers B and C are correct. shifts the supply curve leftward.
The demand curve of the only customer in the amusement park is QD = 200-P. The...
The demand curve of the only customer in the amusement park is QD = 200-P. The park charges an admission fee of 100, while each ride costs 9. 1. Determine the supply curve of the park. 2. Determine the producer surplus without distortions in the market. 3. Determine the consumer surplus without distortions in the market. 4. Price at which dead weight loss is minimized? 5. At which quantity does it occur (in rides)? 6. if the government wishes to...
Draw a Marginal Demand curve of a pollution damage that can be noticeable only from a...
Draw a Marginal Demand curve of a pollution damage that can be noticeable only from a certain level and could increase exponentially.
State whether the labor supply curve, labor demand curve or neither of the two will shift...
State whether the labor supply curve, labor demand curve or neither of the two will shift in the current scenario when the government has mandated workplace closures. If there is a shift, is the shift to the left or to the right? Illustrate your answer with a figure and show what happens to the full-employment level of employment following the shifts, if any. Label the axes and curves clearly
Only one thing can cause movement along a product’s demand curve --- that is, cause a...
Only one thing can cause movement along a product’s demand curve --- that is, cause a change in quantity demanded for that product --- and that’s a change in that product’s price. On the other hand, there are five key variables that can cause a product’s demand curve to shift to the left or right --- that is, lead to a change in demand. Coca-Cola is experiencing shifts in the U.S. demand curve for its famous cola soft drink, as...
The following is the linear specification of demand for a good, where there are only two...
The following is the linear specification of demand for a good, where there are only two of these businesses in the area and the number of buyers, N, of the good did not change during the specified time period.                            Q = a + bPRICE + cINCOME + dSubPrice + eComPrice where                 Q = sales of the good for firm 1                 PRICE = price of the good for firm 1                 INCOME = average annual household income in...
Suppose there are two firms making the same product. The demand curve for the product is...
Suppose there are two firms making the same product. The demand curve for the product is Q = 500 - 5P. Suppose both firms have to select how many items they make at the same time. Once they produce they make the items, they take them to market and sell them for the market clearing price. Assume both firms have the same cost function C = 100 + 10q. What is the optimal output for each firm? What is each...
The market demand curve is given by p = 100 - Q Two firms, A and...
The market demand curve is given by p = 100 - Q Two firms, A and B, are competing in the Cournot fashion. Both firms have the constant marginal cost of 70. Suppose firm A receives a new innovation which reduces its marginal cost to c. Find the cutoff value of c which makes this innovation "drastic".
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT