Please correct answer and don't use hand rating 2. [14] Two scented candle vendors are located side-by-side at the artisanal crafts fair. As iscustomary in the industry, they are competing on price (they both have enormous chalk-board signs advertising their selling price for an 80-hour burn soy wax candle that smells likeyour fondest childhood memories). Vendor 1 has the cost function C(q₁) = 3q₁ and station2 has the cost function C(q) = 5q2 where q1 and q2 are the number of candles sold byvendor 1 and vendor 2, respectively. The market demand for premium-scented soy waxcandles is Q(p) = 50-p where Q = 91 + 92.a) [4] Write the demand functions of the two firms.b) [4] Are the two firms selling their wares at $5 per candle in a Bertrand-Nashequilibrium? Explain your why or why not.c) [6] Characterize a Bertrand-Nash equilibrium. How many candles will each firm sell inthis equilibrium?

Part (a): Write the demand functions of the two firms.Since they are competing on price in a…

Answered: 2. [14] Two scented candle vendors are…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter21: Production And Costs

Section: Chapter Questions

Problem 4QP

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4. A vertically integrated automobile company has an upstream engine division and a downstream assembly division. The demand for the company's cars is given by Q = 20-P. Each car requires one engine. The downstream division's total cost of assembling cars is TCD(Q) = 4Q. The upstream division's total cost of producing engines is TCv (Q) = Q². (a) Suppose that there is no outside market for engines. What is the price and quantity of cars produced by the company? (b) Suppose that there is no outside market for engines. What should be the transfer price for engines? [Hint: the transfer price of an engine should equal the marginal cost of engine production at the optimal quantity.] (c) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the price and quantity of cars produced by the company? (d) Suppose that there is a competitive outside market in which the price of an engine is 12. What is the quantity of engines that the company buys or…
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COURSE: MICROECONOMICS - Cournot Model:In the market for a given good there are only 2 firms satisfying the demand, and their respective total cost functions respond to the form: CTi = 10Qi + 5 and the demand is estimated to be: P = 31 - QIf the decision variable for both firms is that the quantity they will produce and realize will be decided simultaneously it is asked to:(a) calculate the profit and reaction function of each firmb) graph market equilibriumc) calculate the profits that both companies will obtain in equilibrium
6.
am. 133.
Douglas Fur is a small manufacturer of fake-fur boots in New York City. The following table shows the company’s total cost of production at various production quantities.
Your niece is deciding whether or not to open a lemonade stand. She expects to sell 20 cups of lemonade for $1 per cup. She already made a sign that cost her $10 and will have $15 worth of additional costs for cups and lemonade mix if she decides to open the stand. If your niece decides to open the lemonade stand, how much profit will she earn? Show how you arrived at this number. Should she open the lemonade stand? What kind of cost is the $10 spent on the lemonade stand sign?
Spark Studio produces commercials for other companis. A 2-minute commercial, for example, needs exactly 5 minutes of filming and 8 minutes of editing. Let x1 denote the minutes of filming and x2 denote the minutes of editing. a) Suppose that filming costs $45 per minute and editing costs $10 per minute. To produce a 5-miunte commercial, how many minutes of filming and how many minutes of editing Does Spark studio need to minimize cost? How much is this cost? Draw a graph of the isoquant and isocost line to show this optimal bundle. b) Rocket Media, another commercial production company, uses a different technology. The length of commercials it produces is equal to the longer of the two: one-third of the length of filming and one-fourth of the length of editing. When w1 = 15 and w2 = 10, derive Rocket Media's cost function c(y).
Mortimer makes picture frames. From the consumers' perspective, his frames are not different from those offered by other sellers. The going market price of a typical frame is $20. Mortimer has determined that his marginal cost of the fifth frame is $17, of the sixth frame is $19, and of the seventh frame is $21. His total variable cost of producing five frames is $96, and his total fixed cost is $60. In this situation, Mortimer should: Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b с d Produce 5 frames Produce 6 frames Produce 7 frames Shut down
2. A refrigerator manufacturer is planning capacity expansions. They have determined that their capacity cost follows the equation below, where f(y) = kya, is the cost of a plant that can produce y units annually. f(y) = 0.0107y⁰.62 They have determined that when a = 0.62, using a = u/(e" - 1) gives a value u = 0.89. Their demand for refrigerators is growing at a rate of 5000 units annually, and they use a 16% interest rate for discounting. At the optimal capacity addition level, what does each capacity installation cost?

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