This question deals with cost curves and isoprofit curvesKeep in mind that the formula for a firm's cost function is:TC = FC + C(Q)TC → Total Costs:FC → Fixed Costs:C(Q) → Cost of production*Quantity produced → also known as Variable CostsQ1: Firms A and B are two firms supplying products in two separate differentiated goods markets.Equations (1) and (2) give the total cost functions of the two firms:- Firm A: TC = 2Q --- Equation (1)- Firm B: TC = 10 + 2Q --- Equation (2)Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000.The cost per unit in each firm is $2. Firm B has a fixed cost of $10.(a) Make relevant plots of equations (1) and (2)(b) Use the plots in (a) and plots of isoprofit curves valuing $34,000 and $60,000 for the two firms toidentify any differences in the shape of the two firms' isoprofit curves. Can you provide anexplanation for any differences that may exist?(c) Use the information on both firms to assess whether the higher isoprofit curves would always getcloser to the average cost curve as quantity increases. Explain why or why not.

(a) The cost function of firm A is, TC = 2Q ……...equation (1) The cost function of firm B is, TC…

ake relevant plots of equations (1) and (2) se the plots in (a) and plots of isoprofit curves valuing $34,000 and $60,000 for the two firms to entify any differences in the shape of the two firms’ isoprofit curves. Can you provide an planation for any differences that may exist? se the information on both firms to assess whether the higher isoprofit curves would always get oser to the average cost curve as quantity increases. Explain why or why not.

ake relevant plots of equations (1) and (2) se the plots in (a) and plots of isoprofit curves valuing $34,000 and $60,000 for the two firms to entify any differences in the shape of the two firms’ isoprofit curves. Can you provide an planation for any differences that may exist? se the information on both firms to assess whether the higher isoprofit curves would always get oser to the average cost curve as quantity increases. Explain why or why not.

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

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 5E

See similar textbooks

Similar questions

This question deals with cost curves and isoprofit curves. Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q3: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost of production per unit for each firm is $2. Firm B has a fixed cost of $10. (a) Plot isoprofit curves valuing $34,000 and $60,000 for each of the two firms. Provide an explanation for any differences that may exist (b) Use the information given about firm A and appropriate diagrams/figures to explain how the equilibrium will change for firm A if it's cost of production falls by $1
This question deals with cost curves and isoprofit curves. Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q2: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost of production per unit for each firm is $2. Firm B has a fixed cost of $10. (a) Use the information given about firms A and B and appropriate diagrams/figures (hint: isoprofit curves, demand curves) to explain how the equilibrium for both firms will change if a rival company increases its prices. Assume demand curves to be linear
This question deals with cost curves and isoprofit curves. Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q2: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) %3D - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost of production per unit for each firm is $2. Firm B has a fixed cost of $10. (a) Plot isoprofit curves valuing $34,000 and $60,000 for each of the two firms. Can you provide an explanation for any differences that may exist? (b) Use the information given about firms A and B and appropriate diagrams/figures to explain how the equilibrium for both firms will change if a rival company increases its…
This question deals with cost curves and isoprofit curves. Keep in mind that the formula for a firm's cost function is: TC = FC+ C(O) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q2: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost of production per unit for each firm is $2. Firm B has a fixed cost of $10. (a) Plot isoprofit curves valuing $34,000 and $60,000 for each of the two firms. Provide an explanation for any differences that may exist (b) Use the information given about firms A and B and appropriate diagrams/figures to explain how the equilibrium for both firms will change if a rival company increases its prices.
Keep in mind that the formula for a firm's cost function is: TC = FC+ C(Q) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q3: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost of production per unit for each firm is $2. Firm B has a fixed cost of $10. (a) Use the information given about firm A and appropriate diagrams/figures (hint:think isoprofit curves, demand curves) to explain how the equilibrium will change for firm A if it's cost of production falls by $1 Assume demand curves to be linear
Please solve in 20 minute
Suppose that two European electronics companies, Siemens (Firm S) and Alcatel-Lucent (Firm T), jointly hold a patent on a component used in airport radar systems. - Demand for the component is given by the following function \[ P=1,000-Q \] - The total cost functions of manufacturing and selling the component for the respective firms are \[ \begin{array}{c} T C_{S}=70,000+5 Q_{S}+0.25 Q_{S}^{2} \\ T C_{T}=110,000+5 Q_{T}+0.15 Q_{T}^{2} \end{array} \] Assume that the firms agreed to form cartel and calculate the joint profit.
Please answer in 10 minute
Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC - 2Q -(1) - Firm B TC = 10 + 2Q - -(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. (a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2). (b) Use the plots in Q 1(a) and plots of isoprofit curves valuing Rs. 34,000 and Rs. 60,000 for the two firms to identify any differences in the shape of the two firms' isoprofit curves. Can you provide an explanation for any differences that may exist? (c) Use the information on both firms to assess whether the higher isoprofit curves would always get closer to the average cost curve as quantity increases. Explain why or why not.
6.
Suppose the Boston to Philadelphia airline route is serviced by three airlines – US Airways (Firm A) and JetBlue (Firm B) and Continental (Firm C). The demand for airline travel between these two cities is Q = 150 – p. The cost function is C(Q) = 30Q. The cost function is the same for all three airlines. Assume that the three airlines are making investments in airline capacity. In other words, they are simultaneously choosing quantity. (Cournot Competition) Derive US Airways’ residual demand function given JetBlue’s output, qB, and Continental’s output, qC. What is the Marginal Revenue for US Airways? Derive US Airways reaction function Derive the market equilibrium quantity, Q*, price, p*, and Profit.
Suppose the profit maximizing firm sells the same good in two individual markets that it is able to keep separate. Since the price elasticity of demand is different in each market, the firm recognizes that rather than charge all customers the same price, it can increase profits by charging different prices in each of the two markets. The demand equations for each market are shown below: Market 1 P=25-2Q Demand The firm's Total Cost Function is: TC=5Q a) What is the optimal output in Market 1? b) What price will be charged in Market 1? Market 2 P=15-Q c) what is the optimal output in market d) what price will be charged in market e) what is the firm's total profit f ) illustrate your answer