5. A two-equal-size-firm cartel faces demand function Q = 20 - 2Pand each firm faces marginal cost function MC = 2Q. Derive (a) the MR function of the cartel and (b) the MC function for the entire cartel (i.e., EMC).

5. A two-equal-size-firm cartel faces demand function Q = 20 - 2Pand each firm faces marginal cost function MC = 2Q. Derive (a) the MR function of the cartel and (b) the MC function for the entire cartel (i.e., EMC).

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

Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.The marginal cost for firm 1 (The Leader) is given by mc1 = 12 Q.The marginal cost for firm 2 (The Follower) is given by mc2 = 9 Q. (Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .) How much DWL is created by the Leader-Follower industry structure ?
Suppose the demand for oil is P=197Q-0.20. There are two oil producers who form a cartel. Producing oil costs $6 per barrel. What is the profit of each cartel member?
If a cartel is working properly, its firms will likely be producing where (MC; is each firm i's marginal cost, MR is market marginal revenue, and P is price): O MC; MR. O P = MR. MC₁ = MR.
Consider an industry that consists of 4 firms, all competing over the same market, given by the following demand equation: P=80-3Q All firms have the same Total Cost Function, given by: TC₁=10q,+2q Suppose the firms decide to collude and voluntarily restrict output and raise price, in order to increase profits. a) What price will be charged by the members of the cartel? Assume the head of the cartel is fair and distributes output q, equally among the 4 firms (since they have identical costs). b)What is the output of each individual firm? c) What is each individual firm's profit? We know that there is a built-in incentive for cartel members to cheat on the cartel. If, as a result, the cartel breaks down: d) What price will be charged in the market? e) Assuming each firm captures an equal share of the market, what now is each firm's output, q? f) What now is individual firm profit? g) Illustrate your answer
Consider a duopoly in which the marginal cost of every firm is $2. The market demand is: Q = 14 - P, where Q = q1 + q2, and P denotes the price per unit. Calculate the total output, price and production quotas (assuming each firm has 50% of the market) if the firms maximize the joint profits. Total output Q = Price P = $ Production quotas q1 = , q2 =
Three major means of collusion by oligopolists are Multiple Choice cartels, informal understandings, and price leadership. market sharing, mutual interdependence, and product differentiation. cartels, kinked-demand pricing, and product differentiation. informal understandings, P = MC pricing, and mutual interdependence.
Suppose that a price-taker firm has a marginal cost function given by: MC= 20+0.2q. The firm could join a cartel in its industry and agree to a quota of 10 units. The collusion drives the price of the good from $24.55 to $50.00. Suppose that if the firm cheats on the cartel, it has no effect on the price. Calculate the producer surplus of this firm when they cheat on the cartel.
Under the cartel, the individual firm's quantity is (assuming it obeys its quota) Market for Oil One Country's Oil 0₂ MR Figure 42.2 S = MC Multiple Choice ģ 02 G₂- 8 ATC mar MC MR MR
Two firms are engaged in Cournot (simultaneous quantity) competition. Market-level inverse demand is given by P = 160 − 4Q Firm 1 has constant marginal costs of MC1 = 8, while Firm 2 has constant marginal costs of MC2 = 24. 1) Does there exist a low enough positive marginal cost for firm 1 such that firm 1 acts like a monopoly in this market, if so what is the MC if not why?
please explain in steps
A group of firms explicitly colluding to make price and output decisions is called a ) price leadership. b ) a cartel. c ) a concentrated industry. d ) an oligopoly.
Q16 Suppose we are referring to OPEC, the oil cartel. Which would make it easier to maintain an effective collusive agreement among OPEC members? Multiple Choice the emergence of a number of potential entrant firms a decrease in the elasticity of demand for the OPEC's oil a new method of pricing that makes it more difficult for cartel members to determine the prices at which other cartel members are selling oil an increase in the number of substitutes for the oil produced by the OPEC cartel a pledge of allegiance to the cartel