### Marginal cost of production

Assignment Help Microeconomics
##### Reference no: EM13134423

Consider two firms facing the market demand curve P = 100 - Q, where P is in \$/unit, Q is total output, Q = Q1 + Q2, Q1 is the output of firm-1 and Q2 is the output of firm-2. Both firms have identical cost functions. Marginal cost of production is \$10.

a. Suppose (as in the Cournot model) that each firm chooses its profit-maximizing level of output on the assumption that its competitor's output is fixed.

I. Find each firm's "reaction function".

III. What will industry output and price be at equilibrium in this model?

b. If firm-1 operates like a Stackelberg leader, what output would it produce in this case?

c. If firm-2 is the Stackelberg follower, how much output will it produce?

d. What will industry output and price be at equilibrium in the case of Stackelberg model?

#### Questions Cloud

 Explain the users of financial statements : explain he 4 financial statements (descriptions, contents, forms of presentation). Compute overhead costs as a percent of dirct labor : Brimful Corp incurred the following manufacturing costs this period: dirct labor, \$912000; direct materials, \$782000; and factry overhead, \$219000. Compute overhead costs as a percent of (1) dirct labor and (2) dirct materials. Explain impact on the statistics : Accidentally typed in error as a 415, what would be the impact on the following statistics? Answer with increase, decrease, or remain the same. Compute how many milliliters of carbon dioxide : Calculate how many milliliters of carbon dioxide would be produced theoretically from 20g of sucrose at 25 degrees Celsius and 1 atomosphere pressure. Marginal cost of production : What will happen to Y (GDP), r (real interest rate), P(price level), and I(investment), in the short run ?The answer should indicate will these values increase or decrease in the short run. Determine the inventories direct material costs : JD Enterprises applies factry overhead based on dirct labor costs. The company incurred the following costs during 2003: dirct materials costs, \$650000; direct labor costs, \$3,000,000; and factory overhead costs applied, \$1,800,000. Research the social determinants of health. : research the social determinants of health. Write a three to five page paper in which you answer the following questions:•What are the social determinants of health? Explain observation-parameter and population : Identify the following as either (a) observation, (b) parameter, (c) population, (d) sample, or (e) statistic: All employees at that place of employment. Drawing as well naming structures iupac names : Drawing and naming structures; IUPAC names, Give the structure or structures and the IUPAC names of the alkenes formed from the dehydrohalogenation of the following compounds with a strong base

### Write a Review

#### Effects on isoquant and isocost of reduction in wages

Assume that as the result of recent labor negotiation, wage rates are reduced by 10% in the production procedure employing only capital and labor.

What is wrong with this statement: Whenever the industry fails to achieve allocative efficiency by producing too little output, the shortage arises.

#### Draw a supply-demand diagram of the kenyan mangoes market

Draw a supply-demand diagram of the kenyan mangoes market to illustrate both the autarky and free trade positions. make sure you use all the information presented in the some facts above?

#### Analysis of the hold up problem

What does the analysis of the 'hold up' problem contribute to the explanation of the size and scope of firms?

#### Influence on the market supply of labour

Use a graphical illustration to describe briefly what the influence on the market supply of labour

#### Current economic regulations and processes

Explain how a item might evolve from one market structure to another and what that means as to the value, competition and number for companies producing that product.

#### Important information-market structure

What is the source of these profits? Upon patent expiration, numerous rival drug companies offer generic versions of the drug to consumers.

#### Policy and principles of microeconomic

Suppose that the economy is already in recession, and both President and Congress have declared to do something to restore the economy.

#### Calculate the lerner index

Recently, Pfizer and Warner-Lambert agreed to a ninety billion dollar merger, thus creating one of the world's biggest pharmaceutical firms. Pharmaceutical firms tend to expend a greater percentage (%) of sales on R&D activities than other industries..

#### Elasticity of demand and total revenue

Explain the relationship between elasticity of demand and total revenue for the following ranges along the demand curve, using the attached Graphs for Elasticity of Demand, Total Revenue.

#### What should be the price of the policy

The company estimates the probability of no damage to be 0.60, the proof damage between \$0 and \$10,000 to be 0.25, and the probability of damage between \$10,000 and \$25,000 to be 0.12. If the company wants to make a profit of \$200 above the expect..

#### Transfer pricing-optimal output equation

A firm sells specialized electronic computers. Each of the computers has a unique chip produced at a California plant at cost of Cw(Qc)=Q^2 c