Question
In: Economics
The market for sandwiches consists of two sandwich shops operating in the local market that produce...
The market for sandwiches consists of two sandwich shops operating in the local market that produce near identical products and that the inverse demand for sandwiches over the lunch hour is given by P = 280 − 2(Q1 + Q2). In this market each firm independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms. The cost function for Shop 1 is C1(Q1) = 3Q1, and costs for Shop 2 is C2(Q2) = 2Q2. Given this information answer the following:
(a) Calculate the marginal revenue for each shop.
(b) Calculate the reaction function for each shop.
(c) Calculate the level of output each shop will produce if the market is in equilibrium.
(d) Calculate the equilibrium profits for each shop.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
The market for sandwiches consists of two sandwich shops operating in the local market that produce...
The market for sandwiches consists of two sandwich shops
operating in the local market that produce near identical products
and that the inverse demand for sandwiches over the lunch hour is
given by P = 280 − 2(Q1 + Q2). In this market each firm
independently produces a quantity of output, and these quantities
are then sold in the market at a price that is determined by the
total amount produced by the two firms. The cost function for Shop...
The market for sandwiches consists of two sandwich shops operating in the local market that produce...
The market for sandwiches consists of two sandwich shops
operating in the local market that produce near identical products
and that the inverse demand for sandwiches over the lunch hour is
given by P = 280 − 2(Q1 + Q2). In this market each firm
independently produces a quantity of output, and these quantities
are then sold in the market at a price that is determined by the
total amount produced by the two firms. The cost function for Shop...
Local chain of sandwich shops sells sandwiches in a competitive market at $5.39 each. The hourly...
Local chain of sandwich shops sells sandwiches in a competitive
market at $5.39 each. The hourly production function is:
Q = 136L - L2
The marginal product of labor function is:
MPL = 136 - 2L
If the competitive hourly wage is $14.68
a) how many employees do they hire?
b) what are the total hourly labor costs for the firm?
c) what is the total output of the firm?
d) what is the total revenue of the firm?
You are making sandwiches again. This time, one double-decker sandwich consists of 3 slices of bread,...
You are making sandwiches again. This time, one double-decker
sandwich consists of 3 slices of bread, 2 chicken slices, and 4
tomato slices. Suppose that you have 3.15 kg of slices of bread,
1.52 kg of chicken slices, and 1.92 kg of tomato slices.You also
know that a dozen slices of bread weigh 360 g, a dozen slices of
chicken weigh 240 g, and a dozen slices of tomato weigh 144 g. (One
dozen is 12). (a) What is the...
\Sub King and Gyro Mart are the only two sandwich shops in town. Their goods are...
\Sub King and Gyro Mart are the only two sandwich shops in town.
Their goods are imperfect substitutes. Careful research has found
that the demand function for both firms is qi = 24 − 5pi + 2p−i
. Where i is the firm in question and −i is the opponent
firm. In other words, while the price of gyros affects demands for
subs, consumers do not simply buy the cheapest item, some are
willing to pay more to get a sub,...
Sub King and Gyro Mart are the only two sandwich shops in town. Their goods are...
Sub King and Gyro Mart are the only two sandwich shops in town.
Their goods are imperfect substitutes. Careful research has found
that the demand function for both firms is
qi = 24 − 5pi + 2p−i .
Where i is the firm in question and −i is the opponent firm. In
other words, while the price of gyros affects demands for subs,
consumers do not simply buy the cheapest item, some are willing to
pay more to get a...
Assume that MTA Sandwiches sells sandwiches for $3.40 each. The cost of each sandwich follows: Materials...
Assume that MTA Sandwiches sells sandwiches for $3.40 each. The
cost of each sandwich follows:
Materials
$
0.70
Labor
0.70
Variable overhead
0.30
Fixed overhead ($19,580 per month, 17,800 units per month)
1.10
Total cost per sandwich
$
2.80
One of MTA's regular customers asked the company to fill a special
order of sandwiches at a selling price of $2.30 each for a
fund-raising event sponsored by a social club at the local college.
MTA has capacity to fill it...
Assume that MTA Sandwiches sells sandwiches for $3.25 each. The cost of each sandwich follows. Materials...
Assume that MTA Sandwiches sells sandwiches for $3.25 each. The
cost of each sandwich follows.
Materials
$
0.80
Labor
0.30
Variable overhead
0.40
Fixed overhead ($26,280 per month, 21,900 units per month)
1.20
Total costs per sandwich
$
2.70
One of MTA's regular customers asked the company to fill a special
order of sandwiches at a selling price of $2.05 each for a
fund-raising event sponsored by a social club at the local college.
MTA has capacity to fill it...
Assume that MTA Sandwiches sells sandwiches for $3.55 each. The cost of each sandwich follows: Materials...
Assume that MTA
Sandwiches sells sandwiches for $3.55 each. The cost of each
sandwich follows:
Materials
$
1.10
Labor
0.40
Variable
overhead
0.20
Fixed overhead
($23,500 per month, 18,800 units per month)
1.25
Total cost per
sandwich
$
2.95
One of MTA's regular customers asked the company to fill a special
order of sandwiches at a selling price of $2.30 each for a
fund-raising event sponsored by a social club at the local college.
MTA has capacity to fill it...
Assume that MTA Sandwiches sells sandwiches for $3.55 each. The cost of each sandwich follows: Materials...
Assume that MTA
Sandwiches sells sandwiches for $3.55 each. The cost of each
sandwich follows:
Materials
$
1.10
Labor
0.40
Variable
overhead
0.20
Fixed overhead
($23,500 per month, 18,800 units per month)
1.25
Total cost per
sandwich
$
2.95
One of MTA's regular customers asked the company to fill a special
order of sandwiches at a selling price of $2.30 each for a
fund-raising event sponsored by a social club at the local college.
MTA has capacity to fill it...
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