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11. Three oligopolists, A, B and C, produce an identical product, Q. Q is produced under conditions of constant costs, that is, AC = MC = $100. The market demand schedule for Q is: Price Quantity Demanded $1,000 0 950 25 900 50 850 75 800 100 750 125 700 150 650 175 600 200 550 225 500 250 450 275 400 300 a) A, B, and C decide to act illegally as a cartel, to divide the market equally among the three of them, and to set the price and output that will maximize their total profits. What price and output do they set? What is the output level that each of the firms agrees to? What profit is earned by each firm and by the three firms together? b) A is impressed with the honesty of B and C, and believes they will keep to their agreements. They do, and A cheats by increasing output by 25 units. What is the new market price? How have the profit levels of A, B, and C changed? How have total profits in the industry changed? c) What actions are B and C likely to take in retaliation? Show how these actions will affect the market price, and the profit levels of the three firms. d) What can you learn from this problem about the likely stability of a cartel?
The long-run equilibrium for a perfectly competitive industry occurs when the firms are earning economic profits of zero. Why would firm stay in business if it is making zero economic profits
Explain what he has done wrong on each graph and what assumption of preferences is violated by each particular graph.
Explain how either the Newhouse model or the Physician Workshop model could explain why hospitals might inefficiently over-invest in expensive, new technologies. What drives excessive technology investments in each model
Michelle (a calendar year individual) begins a new business as a sole proprietorship. She would like to use an October 31 fiscal year end for her business because the calendar year ends during her busy season
Suppose you're a city planner working on new industrial park and contemplating the use of industrial ecosystem. Describe the major advantages and disadvantages of industrial ecosystem which you would consider in making your decision.
Is the market for coffee perfectly competitive and does the coffee market meet all six conditions of a perfectly competitive market?
How does industry-level price elasticity of demand shape the opportunities for making a profit in an industry? How does firm-level price elasticity of demand do it?
Both Viacom and Paramount owned a diverse group of entertainment business. QVC was a televised shopping channel. The Paramount board of directors accepted a merger offer from Viacom at a price of $69 per share. QVC and Viacom then entered a biddin..
How much substitutability do you suppose exists between inputs in winemaking? How might this factor affect efforts to cut costs?
Assuming no population growth or technological progress, find the steady state capital stock per worker , output per worker, and consumption per worker as a function of the savings rate and the depreciation rate.
You are hungry. Very hungry. You come across one of several restaurants in a given area. As you look through the menu posted outside the door, you see that the prices are about double of what you expected.
Find out the optimal price and quantity with standard pricing. Which is the per-customer profit for the gym? What is the consumer surplus?
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