1. A large share of the world supply of diamonds comesfrom Russia and South Africa. Suppose that the mar-ginal cost of mining diamonds is constant at $1,000 perdiamond and the demand for diamonds is describedby the following schedule:Price$8,0007,0006,0005,0004,0003,0002,0001,000Quantity5,000 diamonds6,0007,0008,0009,00010,00011,00012,000a. If there were many suppliers of diamonds, whatwould be the price and quantity?b. If there were only one supplier of diamonds, whatwould be the price and quantity?c. If Russia and South Africa formed a cartel, whatwould be the price and quantity? If the countriessplit the market evenly, what would be SouthAfrica's production and profit? What would hap-pen to South Africa's profit if it increased its pro-duction by 1,000 while Russia stuck to the cartelagreement?d. Use your answers to part (c) to explain why cartelagreements are often not successful.

The objective of this question is to understand the impact of market structure on the price and…

Answered: 1. A large share of the world supply of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Suppose the home country open up to free trade and a foreign competitor enters the market. Assume thatthe foreign firm has the same cost structure as the home firm (the monopoly from the previous question). The demand for its product is given by the inverse demand function: P = 120 −QD. The company’s costs are: T C = 20Q+ 200 and MC = $20A) Derive the best response function for each firm (h-home and f-foreign)B) Find each firms’ output, the home market price, and each firms’ profit from the home market3. Now, suppose that in addition to the home country opening up to free trade, the foreign country has alsoopened up to free trade. As a result, both firms sell their product in both markets.A) Find each firms’ overall output, market price in each market, and each firms’ overall profitB) Explain what effect free trade has (relative to no trade) on the firms and consumers
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22: What are some of the Factors Leading to Globalization? 23: What are the Characteristics of a Purely Competitive Market? 24: What are the Characteristics of a Monopolistic Competition Market?
Demand for product X is X = 140 - 2P, where P is price. Two companies, Company OldRags and Company ZeroFun both produce good X. Both companies have total cost 22 + 2X, where X; is a company's production output. If OldRags produces 30 units and ZeroFun makes 42 units, then OldRags will have profit and ZeroFun will have profit O 938; 1,322 938; 1,222 O 978; 1,322 O 978; 1,222
(Figure: Pharmaceutical Pills Sales I) A pharmaceutical company sells its pills in foreign and domestic markets. Domestic Market Foreign Market Price ($) 20 Price ($) 20 18 18 16 16 14 14 12 12 10 10 8 8 6 6 MC MC 4 4 2 MR 2 D MR D 0 0 2 4 6 8 10 12 2 4 6 8 10 12 Quantity Quantity Suppose the company must charge the same price in each market. The profit-maximizing price is $ ○ 12 ○ 8.67 7.67 ○ 7.00
A large share of the world supply of diamonds comes from Russia and South Africa. Suppose that the marginal cost of mining diamonds is constant at $3,000 per diamond, and the demand for diamonds is described by the following schedule: see attached If there were many suppliers of diamonds, the price would be $________per diamond and the quantity sold would be __________diamonds. If there were only one supplier of diamonds, the price would be _________per diamond and the quantity sold would be_________diamonds. Suppose Russia and South Africa form a cartel. In this case, the price would be _________________per diamond and the total quantity sold would be __________diamonds. If the countries split the market evenly, South Africa would produce_____________diamonds and earn a profit of. If South Africa increased its production by 1,000 diamonds while Russia stuck to the cartel agreement, South Africa's profit would _increase or decrease________ to. Why…
3. An industry is subject to agglomeration economies (and diseconomies). The profit per firm is £100 for an isolated firm, and increases to a maximum of £160 per firm in a cluster with 6 firms. The profit curve is linear, with a slope of +£12 in the positively-sloped part and -£10 in the negatively-sloped part. Illustrate this profit curve. What will be the equilibrium number of firms in the cluster and how much profit will each firm make? Will this be greater than the efficient number of firms? Explain why. How will an increase in transport costs affect the profit curve and the optimal cluster size? Briefly explain your answer.
Scenario 1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, and total cost curve are given as follows: Q = 160 - 4P TR = 40Q- 0.25Q? MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 1. How much output will Barbara produce? O A. 56 O B. 22 O C. 72 O D. 0 E. None of the above
1. Suppose that inverse demand is given by P = 100 − 1/2 Q and each firm’s marginal cost is 10. Assume fixed costs are 0.(a) Solve for equilibrium price and quantity assuming this is a monopoly market. (i.e. Sup-posing there is only one firm, with no threat of entry, find the choice of quantity thatmaximizes profit, and then compute the corresponding market price.)(b) At this price and quantity, what is the monopolist’s profit?(c) What is consumer surplus?(d) What would be the perfectly competitive price, quantity, and consumer surplus?(e) How much is deadweight loss due to monopoly?
. Do you consider yourself a member of any brand communities (formal or informal)? If so, what effect do these groups have on your purchasing behavior?
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5. Suppose a company has a monopoly on a game called Monopoly and faces a demand curve given by QT = 100-P and a marginal revenue function given by MR = 100 - 2QT where QT equals the combined total number of games produced per hour in the company's two factories (QT = 91 + 92). If factory 1 has a marginal cost function given by MC₁ = q1-5 and factory 2 has a marginal cost function given by MC2 = 0.5q25, how much total output will the company choose to produce and how will it distribute this production between its two factories in order to maximize profits?

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