Alchem (L) is the price leader in the polyglue market. All 10 other manufacturers (follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the remainder of the demand itself. Total demand for polyglue is given by the following function (QT = QL+QF): P = 15,000-4QT Alchem's marginal cost function for manufacturing and selling polyglue is MC₁ = 5,000+6Q, and the aggregate marginal cost function for the other manufacturers of polyglue is EMCP=2,000+4QF- To maximize profits, Alchem should produce units and charge a price of S per unit. What is the total market demand for polyglue at the price established by Alchem? How much of total demand do the follower firms supply? units. units.

Alchem (L) is the price leader in the polyglue market. All 10 other manufacturers (follower [F] firms) sell polyglue at the same price as Alchem. Alchem allows the other firms to sell as much as they wish at the established price and supplies the remainder of the demand itself. Total demand for polyglue is given by the following function (QT = QL+QF): P = 15,000-4QT Alchem's marginal cost function for manufacturing and selling polyglue is MC₁ = 5,000+6Q, and the aggregate marginal cost function for the other manufacturers of polyglue is EMCP=2,000+4QF- To maximize profits, Alchem should produce units and charge a price of S per unit. What is the total market demand for polyglue at the price established by Alchem? How much of total demand do the follower firms supply? units. units.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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