P3 2. Suppose that in the cola soft drink market, the companies Coca-Colaand Pepsi-Cola compete in an oligopoly. Let q is the number of cansproduced by each company in millions. If the total costs of each oneare given by:TCc = 10 + 130qCTCp = 10 + 170qpwhere qc and qp represents the production of cola cans in millons forPepsi Cola and Pepsi Cola, respectively, thus, the marginal costsand average total cost of each one are, respectively:MCc = ACC = $130MCp = ACP = $170In addition, the demand curve for an average trip for this market isgiven byP = 1,000 – Qwhere Q is the total of cans produced in the market in millions.a) If each company can offer only 100, 200 or 300 million of trips,calculate the benefits that each company could obtain, and sayhow much each company would produce in the Nash equilibrium.Calculate also the quantity and the equilibrium price in the mar-ket.b) Now suppose that Pepsi-Cola leaves the market so Coca-Colaremains as a monopolist in this market. Considering that its Mar-ginal Revenue function is now MRC = 1000 - 2qc. What is thequantity and the price equilibrium in the market? Calculate theCoca-Cola's benefits.c) Suppose the government now allows free entry and exit of pro-ducers and makes the market as a competitive market. Calculatenow the quantity and the equilibrium price under perfect compe-tition. Use the highest marginal cost (MC = 170). What is thebenefit of each of the firms in the long term?d) Graph the market demand curve and all market equilibriums cal-culated in the preceding subsections. Compare your results andsay under what market structure the price is higher and underwhich the quantity offered is the highest. Which market structureis most convenient for producers?

In a competitive market, the equilibrium condition is given by P=MC

b) Now suppose that Pepsi-Cola leaves the market so Coca-Cola remains as a monopolist in this market. Considering that its Mar- ginal Revenue function is now MRc = 1000 - 29c. What is the quantity and the price equilibrium in the market? Calculate the %3D Coca-Cola's benefits.

b) Now suppose that Pepsi-Cola leaves the market so Coca-Cola remains as a monopolist in this market. Considering that its Mar- ginal Revenue function is now MRc = 1000 - 29c. What is the quantity and the price equilibrium in the market? Calculate the %3D Coca-Cola's benefits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Michigan Tech received a donation of $436,133 to be used for scholarship funds. The money will be…

A: Cash flow:The sum of the total money is represented in the diagram. It represents the magnitude and…

Q: Question 5 For the below cash flow diagram, determine the equivalent present worth Y for a given…

A: The problem is asking us to find the present worth (Y) of a series of future cash flows. The cash…

Q: 6) You have a balance of $7500 on your credit card and you make no further charges. If your APR is…

A: The interest rate is the amount charged on top of the chief by a lender to a borrower for the…

Q: P 1,500.00 was deposited in a bank account, 20 years ago. Today it is worth P3,000.00 interest is…

Q: ou are considering investing $2,000 (n=0) at a simple interest rate of 11% annually for five years…

A: Investment plan 1: $2000 at n=0 at 11% simple interest rate for five years Plan 2: Invest $1500 at…

Q: 10. Five years ago, you paid P3,400,000 for the house and lot. If you sold it today for P5,000,000,…

A: (10) Five years ago, you paid P3,400,000 for the house and lot. If you sold it today for P5,000,000,…

Q: The Fischer-Tropsch (F-T) process was developed in Germany in 1923 to convert synthesis gas (i.e., a…

A: An amount of money's annual worth is its value today. Amounts that are worth more now than they will…

Q: Banking. Liam's chequing account had a balance of $3,500.00 on September 1st. After reviewing his…

A: On 31st sep, Account Balance = 3500 NSF = 45 Service Charge = 9.95 note Collected = 850 Two deposit…

Q: WHICH IS CORRECT OPTION IN THE SECOND SUBPART .

A: The central banking system of a nation is involved in making of the monetary policies in the…

Q: I put $500 in a bank a year ago at an interest rate that compounded annually. When I withdrew my…

A: Given: Amount received today = $540 Amount deposited a year ago = $500 Number of years = 1 Rate of…

Q: Suppose that you have the option to lease a new Mitsubishi Eclipse, which you otherwise intend to…

A: An individual rents a property to another person for some time and at the end of the period, the…

Q: deposit of $200 now and deposits of 6200 every other year. What is the cotal balance at the end of…

A: here we calculate the total balance at the end of 10 year so by using the formula we calculate and…

Q: If you sell in March a bond future contract for 125 that matures on June 30 of the same year, and at…

A: Rate at which bond future contract is sold in March = $125 Maturity date = June 30 And price at the…

Q: S u m m a r i z e t h e c u r r e n t a n d f o r e c a s t e c o n o m i c t r e n d s…

A: ***Since the student has posted multiple questions, hence, the expert is required to solve only the…

Q: An amortization of a debt is in a form of a gradient series of P10,000 on the first year, P9,500 on…

A: Given cash flow is Rate of interest =0.16 and we need to find present worth of above cash flow.

Q: 6) You have a balance of $7500 on your credit card and you make no further charges. If your APR is…

A: Some credit card companies determine the minimum payment as a portion of your entire statement debt,…

Q: Suppose you were given a one time gift of $10,000 to put into a savings account. The account earns…

A: Compound interest is the rate of interest that is used to calculate the value added to a loan or a…

Q: 6) You have a balance of $7500 on your credit card and you make no further charges. If your APR is…

A: Instead of just a monthly fee or rate, the term annual percentage rate of charge (APR) refers to the…

Q: 41 The change in producer surplus as a result of the shift in the graph below is equal to 1050 b.…

A: 39. The production possibility frontier shows various combination of two goods which can be produced…

Q: BRAM Question 3 (15%) You need to borrow $20,000, and two different companies offer you the…

A: **Loan Amount: 20,000∗∗∗∗MARR(MinimumAttractiveRateofReturn):5∗∗PlanA:DecreasingAnnualPayment∗∗ Year…

Q: Dennis Lamenti wants to buy a new car that costs $15,824.24. He has two possible loans in mind. One…

A: By definition, simple interest is the interest amount for a specific principal amount of money at…

Q: You are making $200 monthly deposits into a savings account that pays interest at a nominal rate of…

A: Future value (FV) is the worth of an asset now based on an anticipated rate of increase in the…

Q: it costs $30,000 to retrofit the gasoline pumps at a certain filling station so the pumps can…

A: Cost = 30,000sell 20,000 gallons per monthr = 1%

Q: a law firm has contracted their client to make the following payment, based on the following…

A: Given, Payments: P10,000 immediately. P1,000 at end of 1 year. P1,500 at end of year 2 P2,000 at end…

Q: 6) You have a balance of $7500 on your credit card and you make no further charges. If your APR is…

A: An interest rate is the level of chief charged by the lender for the utilization of its cash. The…

Q: Home heating accounts for approximately one-third of energy consumption in a typical U.S. household.…

A: 1. Cost of corn-burning stove: $2,4002. Estimated annual savings: $3003. Lifespan of the stove: 11…

Q: Bruce Wayne has a child and wishes to determine what lump sum would have to be paid into an an…

Q: M a k e a r e f l e c t i v e j o u r n a l o f t h e f o l l o w i n g t o p i c s :…

A: Managing personal finances can be a daunting task, but it is essential for achieving financial…

Q: principal of P27,723 is placed in a saving account at 5.23% per annum compounded annually. How much…

A: Principal = P27,723 r = 5.23 n = 3

Q: Consider the following cash flow: A1=−900 A2=−1,100, A3=−1,300 A4=−1,500.…

A: Given the cash flow schedule Period Cash flow 0 1 -900 2 -1100 3 -1300 4 -1500…

Q: You are going to put $X into an account each year for 5 years, beginning in Year 1. Then, from Years…

A: We have been given the following cash flows:Cash outflows from year 1 (beginining in year 1) to year…

Q: (SO2P11) To get the AW of a cash flow of $10,000 that occurs every 10 years forever, with the first…

A: The cash flow of $10,000 occurs every 10 years forever. This means, that at the end of each 10th…

Q: Find OF ƏL : F(K, L) = ln(L) + K In (L) 1 L K O O 1 O + K

A: As given Production Function F(K, L) = ln(L) + K

Q: which one is correct please confirm? Q15: "Original exhange rate is £1 = US$1.4565, what is the…

A: The rate of exchange addresses the number of units of a currency that trades for a unit of another.…

Q: 8. Jones Corporation borrowed P9,000 from Brown Corporation on Jan. 1, 1978 and P12,000 on Jan. 1,…

A: Cashflow shows the stream of cash we get within the period. It includes the cash paid and cash…

Q: Kevin deposited P2,000, P2,500 and P3,000 at the end of the 2nd year, 3rd year and 4th year,…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: If you take four (4) $100 bills out of your secret hiding place and deposit them into your savings…

A: Here, $100 bills are kept with the individual at his secret hiding place. This money will be…

Q: Determine the equivalent value of x from the cash flow in G₁ i% ↑ X

A: Net Present Worth (NPW), also known as Net Present Value (NPV), is a financial metric used in…

Q: What is the ordinary interest on P1,350.75 for 163 days at 3.5%?

A: Given information, Principal amount (P): P1,350.75 Time period (t): 163 days Interest rate (r):…

Q: B A N G K O S E N T R A L N G P I L I P I N A S O R G A N I Z A T I O N A L S T R U C T U…

A: The BSP serves as Country P's central bank. It is in charge of creating and carrying out the…

Q: 12.5% and each month you make only the minimum payment of 5% of your balance, what your balance…

A: Given, P = $7500 Interest rate = 12.5% Minimun Payment Interest = 5% = 0.05 Time = 24 months

Q: W h a t i s t h e m o n e y m a r k e t ? W h a t i s t h e E u r o c u r r e n c y…

A: As per the authoring guidelines, in case of multiple questions asked which are not interrelated,…

Q: Jean deposited P2,000, P2,500 and P3,000 at the end of the 2nd year, 3rd year and 4th year,…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Question

2. Suppose that in the cola soft drink market, the companies Coca-Cola
and Pepsi-Cola compete in an oligopoly. Let q is the number of cans
produced by each company in millions. If the total costs of each one
are given by:
TCc = 10 + 130qC
TCp = 10 + 170qp
where qc and qp represents the production of cola cans in millons for
Pepsi Cola and Pepsi Cola, respectively, thus, the marginal costs
and average total cost of each one are, respectively:
MCc = ACC = $130
MCp = ACP = $170
In addition, the demand curve for an average trip for this market is
given by
P = 1,000 – Q
where Q is the total of cans produced in the market in millions.
a) If each company can offer only 100, 200 or 300 million of trips,
calculate the benefits that each company could obtain, and say
how much each company would produce in the Nash equilibrium.
Calculate also the quantity and the equilibrium price in the mar-
ket.
b) Now suppose that Pepsi-Cola leaves the market so Coca-Cola
remains as a monopolist in this market. Considering that its Mar-
ginal Revenue function is now MRC = 1000 - 2qc. What is the
quantity and the price equilibrium in the market? Calculate the
Coca-Cola's benefits.
c) Suppose the government now allows free entry and exit of pro-
ducers and makes the market as a competitive market. Calculate
now the quantity and the equilibrium price under perfect compe-
tition. Use the highest marginal cost (MC = 170). What is the
benefit of each of the firms in the long term?
d) Graph the market demand curve and all market equilibriums cal-
culated in the preceding subsections. Compare your results and
say under what market structure the price is higher and under
which the quantity offered is the highest. Which market structure
is most convenient for producers?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

T o p i c : I n t r o d u c t i o n t o F i n a n c i a l M a r k e t s W h a t r o l e d o f i n a n c i a l m a r k e t s p l a y i n o u r e c o n o m y ? W h a t a r e p r i m a r y a n d s e c o n d a r y m a r k e t s ? W h a t r e l a t i o n s h i p e x i s t s b e t w e e n f i n a n c i a l i n s t i t u t i o n s a n d f i n a n c i a l m a r k e t s ? W h a t i s t h e m o n e y m a r k e t ? W h a t i s t h e E u r o c u r r e n c y m a r k e t ? W h a t i s t h e c a p i t a l m a r k e t ? W h a t a r e t h e p r i m a r y s e c u r i t i e s t r a d e d i n i t ?
Deposits are made to an account as indicated in the table below (i = 1% per quarter): End of qtr 0 (initial deposit) 1 2 3 4 5 a. Deposit P 100,000 100,000 100,000 0 150,000 0 End of qtr 6 7 8 9 10 Deposit 0 150,000 0 200,000 200,000 What will be the balance at the account at the end of the tenth quarter (that is, after the deposit of $200,000)? b. What one sum at the end of the fifth quarter is equivalent to the specified series of deposits?
What will a $90,000 house cost 10 years from now if the price appreciation for homes over that period .averages 3% compounded annually?
Solutions please for Q39,Q40,Q41,Q42,Q43??
If $4,000 is borrowed today and $8,955 is paid back in 10 years, what interest rate compounded annually has been earned? % Round entry to one decimal place. Tolerance is ±0.2.
You know that paying yourself by depositing money in a savings account is a prudent start to your retirement plan. You determined that, based on your other obligations, you can save 6,375.00 per year via an annual, single year-end deposit. You are 35 years old now, so your money will grow for the next 30 years until you turn 65. You will open a savings account at the Wells Fargo branch near your home. Its savings accounts are paying 6% interest. The following table shows the future value factors for various periods and interest rates: Future Value of an Annuity Factor Year 2% 3% 5% 6% 8% 9% 10% 10 10.950 11.460 12.578 13.180 14.487 15.190 15.937 12 13.412 14.190 15.917 16.870 18.977 20.140 21.384 15 17.293 18.600 21.578 23.270 27.152 29.360 31.772 20 24.297 26.870 33.066 36.780 45.762 51.160 57.274 25 32.030 36.460 47.726 54.860 73.105 84.700 98.346 30 40.567 47.570 66.438 79.060 113.282 136.300 164.491 35 49.994 60.460 90.318 111.430 172.314 215.700…
On January 1, 2018, Kline Inc. borrowed P9,000 from Harvard Co., and on January 1, 2020, it borrowed P12,000. On January 1, 2021, Kline Inc. paid a P7,000 half payment. The loan balance would be amortized over two payments, one on January 1, 2022 and the other on January 1, 2023, with the second payment being 50 percent bigger than the first. What is the amount of each payment if the interest rate is 10%?
John is a very cost-conscious investor. His rule of thumb is that it costs $200 per year, starting in the first year of vehicle life to maintain an automobile. This expense increases by $200 each year over the life of the car. John is now considering the purchase of a four-year old car with 40,000 miles on it for $7,000. How much money will John have to set aside now to pay for maintenance (as a lump sum) if he keeps this car for eight years? John's interest rate is 4% per year. Click the icon to view the interest and annuity table for discrete compounding when i= 4% per year. John will have to set aside $ to pay for maintenance. (Round to the nearest dollar.)
I think the question b should be $500,000 NOT $5,000,000