6. Deviating from the collusive outcome Mays and McCovey are beer-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 $0.60 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey 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 Mays and McCovey choose to work together. 1.00 Demand 0.90 Monopoly Outcome 0.80 0.70 MC = ATC 0.60 0.50 0.40 0.30 0.20 0.10 MR + 30 60 120 150 180 210 240 270 300 06 QUANTITY (Thousands of cans of beer) cans and charge $ so the daily total industry profit in the beer market is $ When they act as a profit-maximizing cartel, each company will produce per can. Given this information, each firm earns a daily profit of $ PRICE (Dollars per can)

6. Deviating from the collusive outcome Mays and McCovey are beer-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 $0.60 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey 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 Mays and McCovey choose to work together. 1.00 Demand 0.90 Monopoly Outcome 0.80 0.70 MC = ATC 0.60 0.50 0.40 0.30 0.20 0.10 MR + 30 60 120 150 180 210 240 270 300 06 QUANTITY (Thousands of cans of beer) cans and charge $ so the daily total industry profit in the beer market is $ When they act as a profit-maximizing cartel, each company will produce per can. Given this information, each firm earns a daily profit of $ PRICE (Dollars per can)

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 3E

See similar textbooks

Similar questions

bok rint An oligopoly producing a homogeneous product is comprised of three firms that act like a cartel. Assume that these three firms have identical cost schedules. Assume also that if any one of these firms sets a price for the product, the other two firms charge the same price. As long as they all charge the same price they will share the market equally; and the quantity demanded of each will be the same. Below is the total-cost schedule of one of these firms and the demand schedule that confronts it when the other firms charge the same price as this firm. Complete the marginal-cost and marginal- revenue schedules facing the firm. erences Mc Graw Hill Output Total cost Marginal cost Price Quantity demanded Marginal revenue 0 1 23456 7 8 $0 180 300 480 720 1,020 1,380 1,800 2,280 Short Anewor LA JUL 26 $780 720 660 600 540 480 420 360 Toolbar navigation (a) What price would be charged, what output would be produced, and what profit would be made by this firm? (b) If the firms…
The Competition Bureau in Canada wants to increase competition and reduce monopoly power. Thus it it worries about industry concentration in Canada. Let's assume that the Canadian halibut processing industry there are only two firms(duopoly). Under such a market structure, if one of the halibut processing firm increases its price, then the other firm in the halibut processing industry can: keep the price of its processed halibut constant and thus increase its market share. keep its price of its processed halibut constant and thus decrease its market share. decrease its price of its processed halibut and thus decrease its market share. try to achieve economies of scale. increase its price of its processed halibut and thus increase its market share.
Mays and McCovey are beer-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 Mays and McCovey 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 Mays and McCovey choose to work together. PRICE (Dollars per can) 2.00 1.80 1.60 1.20 1.00 0.80 0.60 0.40 + 0.20 + 0 Demand 0 40 80 MR MC ATC 160 200 240 250 320 360 400 QUANTITY (Cans of beer) Monopoly Outcome
2. Deviating from the collusive outcome Mays and McCovey are beer-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 $0.20 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey 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 Mays and McCovey choose to work together. (Dollars per can) PRICE 1.00 0.90 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0 0 Demand MC = ATC MR 90 180 270 360 450 540 630 720 810 900 QUANTITY (Cans of beer) Monopoly Outcome (2)
Suppose Farmer Smith from Kansas and Farmer Jones from Missouri agree to restrict their combined output of wheat in an attempt to increase the price and profits. How likely do you think the Smith-Jones cartel is to suceed? Explain.
Consider two Cournot oligopolists, firm 1 and firm 2, in a homogenous product market. The market demand is P = 100 - 3Q and each firm has a constant marginal cost MC=10. The market price of equilibrium and total quantity in the market is: Select one: O a. P* 30 and Q* = 20 O b. P* 40 and Q* = 20 ○ C. P* 40 and Q* = 30 d. P20 and Q* = 30
6. The cartel and the problem of cheating Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm aligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.80 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a certel, 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 Mays and McCovey choose to work together. PRICE (Dollars per can) 2.00 1.80 1.60 Demand 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0 0 + 15 MR + 30 45 60 75 90 105 120 QUANTITY (Thousands of cans of beer) MC = ATC 135 150 Monopoly Outcome
2. Deviating from the collusive outcome Mays and McCovey are beer-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 $0.80 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey 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 Mays and McCovey 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 40 80 MR 120 160 200 240 280 QUANTITY (Cans of beer) 320 MC = ATC 360 400 Monopoly Outcome ?
Mays and McCovey are beer-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 $0.60 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey 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 Mays and McCovey choose to work together. 1.00 Demand 0.90 Monopoly Outcome 0.80 0.70 MC = ATC 0.60 0.50 + 0.40 0.30 0.20 + 0.10 MR 100 200 300 400 500 600 700 800 900 1000 QUANTITY (Cans of beer) PRICE (Dollars per can)
Price MC 500 700 900 Quantity Five firms in an industry have equal and constant marginal costs and act as a cartel, with each firm agreeing to charge a price of $9. If they each sell an equal quantity of output, each firm will earn $ type your answer in revenue. If one firm decides to increase its quantity sold by 200 units, the cheating firms revenue will increase by $ type your anwer and the remaining firms will see tir total revenue decrease by $ type your anwwer.
Only typed answer In a duopoly, each firm has marginal cost MC = 100, and market demand is Q = 500 - 0.5p. Assuming average cost is the same as marginal cost. In which oligopoly, Cournot or Stackelberg, do firms have more market power? a. Cournot since the Lerner Index in the Cournot model is twice as much as that in the Stackelberg model. b. Stackelberg since the Lerner Index in the Cournot model is twice as much as that in the Stackelberg model. c. Cournot since the Lerner Index in the Cournot model is about 1.08 times as much as that in the Stackelberg model. d. Stackelberg since the Lerner Index in the Cournot model is about 1.08 times as much as that in the Stackelberg model.
Consider a town in which only two residents, Raphael and Susan, own wells that produce water safe for drinking. Raphael and Susan can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Price (Dollars per gallon) 3.60 Quantity Demanded Total Revenue (Gallons of water) (Dollars) 3.30 35 $115.50 $210.00 $283.50 $336.00 3.00 70 2.70 105 2.40 140 2.10 175 $367.50 1.80 210 $378.00 1.50 245 $367.50 1.20 280 $336.00 0.90 315 $283.50 0.60 350 $210.00 0.30 385 $115.50 420 Suppose Raphael and Susan form a cartel and behave as a monopolist. The profit-maximizing price is s agreement, Raphael and Susan agree to split production equally. Therefore, Raphael's profit is per gallon, and the total output is gallons. As part of their cartel and Susan's profit is s Suppose that Raphael and Susan have been successfully operating as a cartel. They each charge the monopoly price and sell half of the…