10.... 2. Deviating from the collusive outcomeStargell and Schmidt are brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer isconstant and equals $1.20 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm.Suppose that Stargell and Schmidt form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this modelrequires that the two companies must equally share the output.)Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Stargell andSchmidt choose to work together.PRICE (Dollars per can)2.001.801.601.401.201.000.800.600.400.2000Demand60 120MR180 240 300 360 420QUANTITY (Cans of beer)MC = ATC480 540 600Monopoly Outcome When they act as a profit-maximizing cartel, each company will produceinformation, each firm earns a daily profit of $cans and charge $, so the daily total industry profit in the beer market isOligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume thetwo companies form a cartel and decide to work together. Both firms initially agree to produce half the quantity that maximizes total industry profit.Now, suppose that Stargell decides to break the collusion and increase its output by 5 decrease Schmidt continues to produce the amount set underthe collusive agreement.Stargell's deviation from the collusive agreement causes the price of a can of beer tonow $while Schmidt's profit is nowStargell increases its output beyond the collusive quantity.Iper can. Given thisincreaseto $. Therefore, you can conclude that total industry profitper can. Stargell's profit iswhen

Collusion is basically described as an unlawful covert agreement or cooperation between two parties…

2. Deviating from the collusive outcome Stargell and Schmidt are brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $1.20 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Stargell and Schmidt form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Stargell and Schmidt choose to work together. PRICE (Dollars per can) 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0 0 Demand 60 MR 120 180 240 300 360 420 480 QUANTITY (Cans of beer) MC = ATC 540 600 Monopoly Outcome ?

2. Deviating from the collusive outcome Stargell and Schmidt are brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $1.20 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Stargell and Schmidt form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Stargell and Schmidt choose to work together. PRICE (Dollars per can) 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0 0 Demand 60 MR 120 180 240 300 360 420 480 QUANTITY (Cans of beer) MC = ATC 540 600 Monopoly Outcome ?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Are beer and pretzels complements or substitutes?
6
Y6
i will 10 upvotes.
am. 122.
Define the (own) price elasticity of demad. Explain how this parameter affects the equilibrium in the models discussed during the course. В
Name the various determinants of demand..
Suppose you know that the price of Gasoline has recently increased. Explain whether you can determine if this was as a result of s shift in supply and/or demand and why. 5.
Which is true of the graphs?
A supple curve for which of the following products would likely be the most inelastic? a. Car b. A glass of lemonade c. A radio d. a pair of jeans
Chinas economy has grown at an average rate of 9% during the last 10 years. Chinas income per capita increased from less than $900 in 2004 to $8,800 in 2018. This has boosted the demand for different products including cars, new housing projects, and building materials. At the same time, oil prices decreased due to the. "fracking technology" extensively used in. the. U.S. and Canada. Graph the market of the. SUVs in china. Clearly define the old and new P and Q of equilibrium.
32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. a O O O O O O O O O O O O O O O O O Refer to Figure 3.4 and identify the true statement. a. The original equilibrium quantity was 57. b. The demand for DVD rentals has decreased. O The below figure shows the demand and supply of DVD rentals in a city. S₁ and D₁ are the original supply and demand curves. The demand curve shifts from D₁ to D₂. c. The supply of DVD rentals has decreased. d. The new equilibrium price is $3. e. The new equilibrium quantity is 48. Icon Key Price per DVD rental ($) 5+ 4+ 3- 2.50 2+ 1 0 10 20 30 Figure 3.4 + Quantity (Number of DVD rentals) ST Di + 40 50 60 70 80 90 100 110 48 57 66