3. Because cooking soufflés is incredibly difficult, the supplyof soufflés in a small French town is controlled by two bak-ers, Gaston and Pierre. The demand for soufflés is givenby P=30-20, and the marginal and average total cost ofproducing soufflés is $6. Because baking a soufflé requiresa great deal of work and preparation, each morning Gastonand Pierre make a binding decision about how many souf-flés to bake.HomW buanolinmas-gitalprofa. Suppose that Pierre and Gaston agree to collude,evenly splitting the output a monopolist would makeand charging the monopoly price.i. Derive the equation for the monopolist's marginalrevenue curve. On obii. Determine thefor the cartel..profit-maximizingnebyliii. Determine the price Pierre and Gaston will be ableto charge.collective outputhostiv. Determine profits for Pierre and Gaston individu-ally, as well as for the cartel as a whole.b. Suppose that Pierre cheats on the cartel agreement bybaking one extra soufflé each morning.JORTEShailogonemi. What does the extra production do to the price ofsoufflés in the marketplace?ii. Calculate Pierre's profit. How much did he gain bycheating?iii. Calculate Gaston's profit. How much did Pierre'sdla obieccheating cost him?202080 BrV.Ynoinsamosiv. How much potential profit does the group lose as aDisamostoresult of Pierre's cheating?01511Dc. Suppose that Gaston, fed up with Pierre's behavior,also begins baking one extra soufflé each morning.Halogo.com si. How does the extra production affect the price ofsoufflés in the marketplace?100tre anonomii. Calculate Gaston's profit. How much did he gainby cheating?THEiii.Calculate Pierre's profit. How much did Gaston'scheating cost him?iv.How much potential profit does the group lose as aresult of Pierre's and Gaston's cheating?Demonstrate that it is in neither Pierre's norGaston's best interest to cheat further on theirvode el agreement.es

Note: “Since you have posted multiple questions with multiple sub-parts, we will provide the…

. Because cooking soufflés is incredibly difficult, the supply of soufflés in a small French town is controlled by two bak- ers, Gaston and Pierre. The demand for soufflés is given by P=30-20, and the marginal and average total cost of producing soufflés is $6. Because baking a soufflé requires a great deal of work and preparation, each morning Gastor and Pierre make a binding decision about how many souf- flés to bake. a. Suppose that Pierre and Gaston agree to collude evenly splitting the output a monopolist would make and charging the monopoly price. i. Derive the equation for the monopolist's margina revenue curve.

. Because cooking soufflés is incredibly difficult, the supply of soufflés in a small French town is controlled by two bak- ers, Gaston and Pierre. The demand for soufflés is given by P=30-20, and the marginal and average total cost of producing soufflés is $6. Because baking a soufflé requires a great deal of work and preparation, each morning Gastor and Pierre make a binding decision about how many souf- flés to bake. a. Suppose that Pierre and Gaston agree to collude evenly splitting the output a monopolist would make and charging the monopoly price. i. Derive the equation for the monopolist's margina revenue curve.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Mortimer makes picture frames. From the consumers' perspective, his frames are not different from…

A: In a competitive market, firms are price taker. Profit is maximum when the firm produces at P =…

Q: fasha owns a muffin shop. Her marginal cost, average variable cost, and average total cost curves…

A: Economic profit is one kind of profit which is determined by using the subtraction between the total…

Q: Exercise 4 Suppose that there are two farmers, Earl and Pearl, who grazetheir milk cows on the…

A: Nash equilibrium is a strategy in a game theory in which each player chooses the best they can while…

Q: Suppose that the market for frying pans is a competitive market. The following graph shows the daily…

A: It has been given that the pan market is a perfectly competitive market. In such markets there are…

Q: Two firms produding identical products may merge due to the existence of Mutple Chelce econemes of…

A: Economics is a branch of social science that describes and analyzes the behaviors and decisions…

Q: In 2008, American Airlines became the first major airline in the US to announce they would begin…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Benjamin Peter Pants $14 $8 Jacket $7 $11 The owner of the dry cleaning store has a marginal cost…

A: Economics refers to the study of scarcity and its implications for the use of resources, production…

Q: Suppose a handbag maker currently sells 500 handbags per week and makes a profit of $7,000 per week.…

A: Revenue means the income incurred by selling the output at given price level.

Q: The gains and loss from selling one more unit Sean's Fire Engines is the sole seller of fire engines…

A: Total revenue is the product of price charged and the quantity sold. It is the total amount of…

Q: In 2008, American Airlines became the first major airline in the US to announce they would begin…

A: Sunk costs are costs that have already been incurred, so they are completely irrelevant when making…

Q: Profit is the incentive that drives our market economy. Firms make production, pricing, and hiring…

A: Opportunity cost:It refers to sacrificing one good for an additional unit of another good. In…

Q: Use the photos to solve the problem below Imagine that firm X chooses their quantity first, then…

A: There are two firms firm X and firm Y. both the firms have same marginal cost at zero, MC=0 and firm…

Q: mix

A: The Market failure occurs when the market forces of demand and supply are not able to deliver the…

Q: Suppose a science museum charges $15 for admission, and each day 200 adults visit the museum.…

A: The museum charges $15 for admission Every day 200 adults visit the museum. For every $1000 spent on…

Q: Using the data in the following table, show what happens to the firm's output choice and profit if…

A: Cost can be defined as a concept that shows the amount of expenditure and any other sacrifice such…

Q: When does an Allocative Efficiency condtion associated with competitive equilibrium occur?

A: Answer: Perfect competition: perfect competition is a market structure where there is a large number…

Q: You are one of 5 identical firms (i. e., you all have the same costs) that sell widgets. Each day…

A: The Average Variable Cost (AVC) for a firm that produces 2 widgets is $1.50Explanation:To calculate…

Q: ATC 30 AVC 20 MC 10 10 15 20 25 30 35 40 45 50 QUANTITY (Thousands of pans per day) In the short…

A: The firm produces output at the level where the marginal cost equals marginal revenue. The firm's…

Q: Suppose the graph depicts the marginal cost (MC) curves of two profit maximizing Texas cotton…

A: A firm in a competitive market maximizes its profit as its production cost per unit equals the…

Q: In 2008, American Airlines became the first major airline in the US to announce they would begin…

A: Sunk costs are expenses that have already been incurred, hence they have no bearing on decisions…

Q: Suppose that the market for black sweaters is a competitive market. The following graph shows the…

A: Answer: According to the above figure if the market price is $15 the equilibrium occurs at point E.…

Q: What are transaction costs? How do transaction costs affect the boundaries of a firm?

A: The cost incurred during the process of buying and selling goods and services is referred to as…

Q: am. 116.

A: Define Profit FunctionsCereal Profit (PC): The profit from producing cereal is defined by its…

Q: Ross is an owner of a donut shop and is subjected to a perfectly competitive market. When the news…

A: In a perfectly competitive market, the market price is determined by the market forces at the…

Q: Please explain how to graph this. From the curve of the demand and supply and the factors that…

A: The tariff on imported raw sugar and the advertising campaign by Coke and Pepsi will likely cause…

Q: Profit is the incentive that drives our market economy. Firms make production, pricing, andhiring…

A: The objective of the question is to analyze the situation faced by Kaiser Aluminium in 2000 and…

Q: Suppose the market for fresh pork is a competitive market. Initially, it is operating at its…

A: Given market price = $50 Decreased price = $30

Question

3. Because cooking soufflés is incredibly difficult, the supply
of soufflés in a small French town is controlled by two bak-
ers, Gaston and Pierre. The demand for soufflés is given
by P=30-20, and the marginal and average total cost of
producing soufflés is $6. Because baking a soufflé requires
a great deal of work and preparation, each morning Gaston
and Pierre make a binding decision about how many souf-
flés to bake.
HomW buanolinmas-gitalprof
a. Suppose that Pierre and Gaston agree to collude,
evenly splitting the output a monopolist would make
and charging the monopoly price.
i. Derive the equation for the monopolist's marginal
revenue curve.

On obii. Determine the
for the cartel..
profit-maximizing
nebyl
iii. Determine the price Pierre and Gaston will be able
to charge.
collective output
host
iv. Determine profits for Pierre and Gaston individu-
ally, as well as for the cartel as a whole.
b. Suppose that Pierre cheats on the cartel agreement by
baking one extra soufflé each morning.
JORTE
Shailogonem
i. What does the extra production do to the price of
soufflés in the marketplace?
ii. Calculate Pierre's profit. How much did he gain by
cheating?
iii. Calculate Gaston's profit. How much did Pierre's
dla obiec
cheating cost him?
202080 Br
V.
Ynoinsamos
iv. How much potential profit does the group lose as a
Disamosto
result of Pierre's cheating?
01511D
c. Suppose that Gaston, fed up with Pierre's behavior,
also begins baking one extra soufflé each morning.
Halogo.com s
i. How does the extra production affect the price of
soufflés in the marketplace?
100
tre an
onom
ii. Calculate Gaston's profit. How much did he gain
by cheating?
THE
iii.
Calculate Pierre's profit. How much did Gaston's
cheating cost him?
iv.
How much potential profit does the group lose as a
result of Pierre's and Gaston's cheating?
Demonstrate that it is in neither Pierre's nor
Gaston's best interest to cheat further on their
vode el agreement.es

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction:

VIEW

Step 2: Part a (i) Derivation of marginal revenue curve of the monopolist:

VIEW

Step 3: Part b (ii) Determine profit maximizing collective output:

VIEW

Step 4: Part a (iii)

VIEW

Step 5: Part a (iv) Determine the profit:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

3. Profit maximization using total cost and total revenue curves Suppose Bob runs a small business that manufactures teddy bears. Assume that the market for teddy bears is a competitive market, and the market price is $25 per teddy bear. The following graph shows Bob's total cost curve. Use the blue points (circle symbol) to plot total revenue and the green points (triangle symbol) to plot profit for teddy bears quantities zero through seven (inclusive) that Bob produces. TOTAL COST AND REVENUE (Dollars) 200 175 150 125 100 75 50 25 0 -25 O ☐ ☐ 0 1 2 3 4 5 QUANTITY (Teddy bears) ☐ 6 Total Cost 7 8 O Total Revenue Profit ?
Hello, this is a microeconomics question. Please use a drawing of a relevant graph to explain how does perfect competition ensure allocative efficiency? Not sure if I'm supposed to use this graph, but if i am please use it as reference when making your explantion to the question of how does perfect competition ensure allocative efficiency
Discuss economies of scale and how average cost changes as output increases. What pricing strategy should a firm adopt while they are experiencing economies of scale? 250 words please
What is an example of another business that stays open even when it's slow, and its revenue does not seem like it could cover its costs? Use microeconomics terms to explain
Show what happens in the short run on both graphs when a new medical study shows soybeans to be highly carcinogenic. On the market graph, you will shift a curve or curves. On the firm's graph, use Price 2 to draw a new price line for the firm. On both graphs, indicate the new equilibrium point with point B. Now, show the changes that get both graphs back to long‑run equilibrium. Use shift(s) for the market and Price 3 for the firm. Indicate the new long‑run equilibrium with point C.
Say the market demand coming from consumers is P = 40 - Q. Say firm 1 has total cost TC1 = Q1+ Q1^2, where Q1 is the Q for firm one, and similarly for firm 2 TC2 = 4Q2 + 0.5Q2^2. In each scenario below show your work and say what is total Q in market market price the Q of each firm and the profit of each firm: The scenarios are the firms compete as if in perfect competition the firms form a cartel the firms act as Cournot Duopolists.
Help solving the table
Explain the gains from trade that arise for both buyers and sellers in the following transactions: a. Neighbors Jordan and Chelsea are both working parents. They are able to hire a single babysitter to care for both of their toddlers for 75% of what they would collectively have to pay two separate babysitters. b. Elijah decides that his family should eat more healthy meals, but they are short on time. He buys a subscription that sends healthy preplanned meals to his home three times a week. c. Callie accepts an extra shift at work and hires a cleaning service to clean her apartment.
Attempts: Average: 12 5. Profit maximization and shutting down in the short run Suppose that the market for sports watches is a competitive market. The following graph shows the daily cost curves of a firm operating in this market. V ATC AVC PRICE (Dolars per watch) 100 5 MO 0 0 10 20 30 40 50 60 70 80 90 100 QUANTITY(Thousands of watches) For each price in the following table, calculate the firm's optimal quantity of units to produce, and determine the profit or loss if it produces at that quantity, using the data from the previous graph to identify its total variable cost. Assume that if the firm is indifferent between producing and shutting down, it will produce. (Hint: You can select the purple points [diamond symbols] on the previous graph to see precise information on average variable cost.) Price Quantity (Dollars per watch) (Watches) 25.00 40.00 65.00 Total Revenue Fixed Cost Variable Cost (Dollars) (Dollars) (Dollars) 520,000 $20,000 520,000 (Dollars) If the firm shuts down,…
The accompanying graph shows the cost curves for Moe's mushroom gathering business, which is perfectly competitive. Price ($/bushel) 60 50 40 30 20 10 0 0 ΤΑ 10 20 30 40 50 60 70 80 Quantity (bushels/month) Select one: O A. 50 bushels. C If mushrooms sell for $10 per bushel, and Moe chooses the profit-maximizing quantity, he will gather: B. 30 bushels. O C. 20 bushels. O D. zero bushels.