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Problem 1: In the model of a dominant firm, assume that the fringe. Supply curve is given by Q = -1 + 0.2P, where P is marked price and Q is output. Demand is given by Q = 11 - P.
What will price and output be if there is no dominant firm? Now assume that there is a dominant firm, whose marginal cost is constant at $6. Derive the residual demand curve that it faces and calculate that it faces and calculate its profit maximizing output and price.
Problem 2: A selfless person approaches Jones and Smith with a $100 bill and offers to sell it to the highest bidder, but both the winning and losing bidders must pay her their bids. So if Jones bids $2 and Smith bids $1 they pay a total of $3, but Jones gets the money, leaving him with a net gain of $98 and Smith with $1. If both bid the same amount, the $100 split evenly between them. Assume that each of them has only two $1 bills on hand, leaving three possible bids: $0, $1, or $2. Write out the payoff matrix for this game, and then find its Nash Equilibrium.
Consider now that the entrant, if fought, has the possibility of withdrawin from the industry (at a loss of 1 for the entrant and a gain of 8 for the incumbent), or staying (at a loss of 5 for each player).
In 1998, Americans smoked 470 billion cigarettes. The average retail price was $2 per pack. Statistical studies have shown that the price elasticity of demand is -0.4, and the price elasticity of supply is 05. Using this information
Suppose you are an industrialist begninning a biotechnology company. If your research is successful, technology can be sold for $30 million. If your research is unsuccessful, it will be worth nothing.
use the following information to answer the questions below.nbsp assume that as per the normal assumptions of the
Assuming there is no change in either demand or the firms' cost curves, explain what will happen in the long run to the price of fertilizer, marginal cost, average total cost, the quantity supplied by each firm, and the total quantity supplied to ..
Looking at the chart below, suggest the kinds of variables that could be used to represent the following factors, which are believed to affect the demand for any product. Determinants of Demand Suggested Variables to
microeconomic monopolya monopolist faces the following demand function for its product q 45 - 5p the fixed costs of
What is the total dollar value of the change in welfare in the United States caused by the tariff? State whether the U.S. gets a welfare gain or suffers a welfare loss from the tariff.
What is the consumer surplus [loss] associated with the merger and what was the profit before the merger? after? increase? How does the consumer loss compare to the increase in profit?
Gobi Inc. has sales of $40,000,000. The contribution margin is $0% and the fixed costs are $3,000,000. The variable costs per unit is $12. The company is considering two different strategies for increasing their profits:
How does a decrease in demand for movie tickets affect equilibrium in the market for movie tickets and what is the marginal cost of producing the second car?
Discuss a firm's objective relative to its economic cost. Describe each of the firm's economic cost, and whether these would be considered explicit or implicit. What is the difference between an economic profit and an accounting profit.
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