A market has many small firms and one dominant firm. The market demand is Q = 100 - 5P. The dominant firm has a constant marginal cost of $6. All the smaller fringe firmscombined have a supply curve given by Qe = 4P -8.The dominant firm sets the market price, and the fringe firms act as price takers. The dominant firm allows the fringe firms to sell as many units as they want at the price set bythe dominant firm. The rest of the market is then supplied by the dominant firm.units, and the price it charges is $(Enter your responses as integers.)The profit-maximizing quantity produced by the dominant firm is

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Answered: A market has many small firms and one…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A market has many small firms and one dominant firm. The market demand is Q = 100-5P. The dominant firm has a constant marginal cost of $6. All the smaller fringe firms combined have a supply curve given by Qs = 4P-8. The dominant firm sets the market price, and the fringe firms act as price takers. The dominant firm allows the fringe firms to sell as (Enter your responses many units as they want at the price set by the dominant firm. The rest of the market is then supplied by the dominant firm. The profit-maximizing quantity produced by the dominant firm is units and the price it charges is $ as integers.) The fringe firms will produce and sell a total of units at the market price r your response as an integer.)
A dominant or price setting firm and several smaller price takers serve a market where total market demand is Qd = 700 – 3P and the combined supply from all the smaller firms is Qs = - 20 + 2P. State the dominant firm’s marginal revenue function (MRf), and use it to determine its profit maximizing quantity and the price (P) it will set for the market if MC = $56.
A market consists of a dominant firm and a number of fringe firms. The followings are the information about these firms. Total market demand: QALL=300 – (2.5) P The competitive fringe supply function (total): QF=2P-12 The dominant firms marginal cost function: MC = 12 + (1⁄2) QD. a) What is the equilibrium price set by the dominant firm? b) How much will the competitive fringe supply to the market at the price found in question (a)? Show the answers graphically.
a and b
C2) Consider an industry with only two firms: firm A and firm B. The industry's inverse demand is P(Q) = 400 - ¹1/Q, 10 where P is the market price and Q is the total industry output. Each firm has a marginal cost of $10. There are no fixed costs and no barriers to exit the market. a) Suppose that the two firms engage in Cournot competition. Find the equilibrium price PNE in the industry, the equilibrium outputs QANE and QBNE, as well as the profits NEA and NEB for each firm. marks] b) Suppose the two firms engage in Stackelberg competition, with firm A moving first, and firm B moving second. Find the equilibrium price PS in the industry, the equilibrium outputs QS and QBS, as well as the profits π and TSB for each firm. в c) For this subquestion only, suppose that firm B has a fixed cost of $200 000: What will firm B's optimal decision be, and what will be the resulting market structure? Now assume that instead of having two firms in the market, we have a monopoly facing the inverse…
In a two-firm market, let the marginal cost of producing a product be $20 and the market demand for their products be given by Q1=12-P1+P2 and Q2=12-P2+P1. What is the Bertrand equilibrium price each firm would produce at in this market? Answer: $32
Suppose that there are two types of firms in a perfectly competitive market. Firms of type A have costs given by CA(q) = 30q2 + 10q. Firms of type B have costs given by CB(q) = 50q2 + 10. ( dCA dq = 60q + 10 and dCB dq = 100q). There are 60 firms of type A and 100 firms of type B. Derive the individual firm supply functions for each type of firm and What is the range of prices in which some firms produce but others do not? Are there prices at which no firms produce Why?

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