Find the monopoly firm profit-maximizing price of production

Assignment Help Business Economics

Reference no: EM131112513

Suppose mountain spring water can be produced at no cost and the inverse demand for mountain spring water is P = 1200 – 0.2Q. Answer the following questions.

a. Suppose the market of mountain spring water is supplied by a monopoly firm that cannot price discriminate. Find the monopoly firm’s profit-maximizing price and quantity of production. (10 pts.) [Hint: MR = P + (ΔP/ΔQ)*Q]

b. Suppose the market of mountain spring water is supplied by two firms (Firm A and firm B) that behave like a Cournot duopoly. Find the Nash Equilibrium price and quantity of production for each firm. (10 pts.) [Hint: Q = QA + QB; MRA = P + ((ΔP/ΔQA)*QA and MRB = P + ((ΔP/ΔQB)*QB]

c. Suppose the market of mountain spring water is supplied by two firms (Firm A and firm B) that behave like a Stackelberg duopoly where firm A is the leader and firm B is the follower. Find the Nash Equilibrium price and quantity of production for each firm. (10 pts.) [Hint: Q = QA + QB; MRA = P + ((ΔP/ΔQA)*QA and MRB = P + ((ΔP/ΔQB)*QB]

Reference no: EM131112513

Questions Cloud

Employment by sector-major industries and unemployment : Carry out a research of RUSSIA's economy. minimum areas to discuss includes: the GDP, GDP by Sector, GDP per capita, employment by sector, major industries, unemployment, labor force by age, education, literacy rates, infrastructure, technology, war,..

Calculate the average cost and marginal cost : Firm Supply Curve. Calculate the average cost and marginal cost. From the firm profit maximization behavior, solve the firm’s short run supply curve.

What is the year-zero net cash flow : New-Project Analysis The president of the company you work for has asked you to evaluate the proposed acquisition of a new chromatograph for the firm’s R&D department The equipment's basic price is $100,000, and it would cost another $15,000 to modif..

Modified accelerated cost-recovery system : Cathy has one year left before she completes her degree in industrial engineering. She is spending this summer working for her family's firm, MMM (Molehill & Mountain Movers). MMM runs a fleet of heavy construction equipment and sells gravel for road..

Find the monopoly firm profit-maximizing price of production : Suppose mountain spring water can be produced at no cost and the inverse demand for mountain spring water is P = 1200 – 0.2Q. Suppose the market of mountain spring water is supplied by a monopoly firm that cannot price discriminate. Find the monopoly..

Identify the nash equilibrium of this game : Consider the following game: Joanna has a credit card account with Capital One. Capital One’s available strategies are to raise Joanna’s credit card interest rate or do nothing. Joanna’s available strategies are to transfer her Capital One credit car..

Affects someone else either positively or negatively : One view is that life is one big externality: just about everything someone does affects someone else either positively or negatively. To permit government to deal with externality problems is to permit government to tamper with everything in life. N..

National labor relations board for an election : In April 2013, several employees of Javatech, Inc., a computer hardware developer with 250 employees, started organizing the Javatech Employees Union (JEU). When Javatech refused to voluntarily recognize the union, organizers petitioned the National ..

Wages rise before all food stamps are eliminated : A welfare recipient can receive food stamps as well as cash welfare benefits. If the food stamp allotment is set as follows, How high can wages rise before all food stamps are eliminated? If the welfare formula in Problem 1 applies, what is the combi..

User Account

All Pages