Consider the model with monopolistic competition and full symmetry between the firms (internalreturns to scale) in a single integrated market. Now assume that a new technology becomes availablethat reduces a firm's marginal cost of production by a given amount but requires a larger fixed-costinvestment to implement. Suppose that all fırms adopt the new technology. How does this impact theequilibrium number of varieties and the equilibrium price? Show your work.EditViewInsertFormatToolsTable

In a model with monopolistic competition and full symmetry between firms, each firm produces a…

Answered: Consider the model with monopolistic…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

onsider a homogenous good industry with four firms. Total demand is given by D(p)=200-p.The variable (=marginal) cost of each of the firms is c1=10, c2=20, c3=30 and c4=35. Firms compete in prices. Suppose firms 1 and 2 merge into one entity and produce with a marginal cost of 15. Which of the following statements is correct? After the merger, total welfare increases by $500. After the merger, total welfare decreases by $500. After the merger, total welfare increases by $1000. After the merger, total welfare decreases by $1000. None of the above.
Each of the statements below describes a characteristic of the following market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. Identify which market structure displays each of the characteristics. (There may be more than one.) a) Each firm produces at Minimum efficient scale (MES) in long-run equilibrium. b) Firms earn profit in long-run equilibrium. c) Each firm produces output where MC=MR. d) Each firm produces output where P=MC. e) There is free entry to the industry
Suppose the global market for personal computers is monopolistically competitive. If a country engages in a two-way trade in personal computers, such trade is usually based on Multiple Choice comparative advantage. constant returns to scale. product differentiation. external scale economies.
please help me with the last question. Thank you
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will the profits of carmakers in the U.S. compare to the profits of carmakers in China, everything else being equal?
Juanita owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on her property, making a large crater. The event attracts scientists and tourists, and Juanita decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (D) curves and marginal revenue (MIR) curves for the two markets. Juanita's marginal cost of providing admission tickets is zero.
Solve all questions compulsory.......
Two firms compete on price every year. The inverse demand function each firm faces depends on which firm has chosen the lowest price that year. The one that did captures the entire market. If, on the other hand, both prices are the same then they split the market evenly. Consumers round up prices to the nearest integer. For the firm with the lowest price p, demand is given by: q = 24-2p: Marginal costs are constant and equal to $4 for both firms. a. Define the Normal form of the stage game and determine the Nash Equilibria, the Cooperative Equilibrium and the Optimal Deviation from cooperation. b. For the once repeated (2 stages) game, determine if a Nash Equilibrium exists that improves on simply playing the (better) Nash Equilibrium of the stage game twice c. For the infinitely repeated game, determine what the interest rate would have to be to prevent the firms from cooperating. d*. Determine the relation between the interest rate and the number of punishment periods in a…
Price-discriminating firm Cho owns a plot of land in the desert that isn’t worth much. One day, a giant meteor falls on her property. The event attracts scientists and tourists, and Cho decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show demand (D) curves and marginal revenue (MR) curves for the two markets. Cho’s marginal cost of providing admission tickets is zero. I hope you can see a clear picture.
The auto industry in the U.S. has long been dominated by the Big Three carmakers: Ford, General Motors, and Chrysler. The auto industry in China, on the other hand, has more than 170 carmakers. Automakers in the U.S. have some monopoly power while the car market in China has the characteristics of a perfectly competitive market. Based on these differences in market characteristics, explain how car makers in the U.S. will “behave” compared to carmakers in China. In particular, address the following considerations: How will carmakers in the U.S. respond to consumers’ desires compared to Chinese carmakers’ response to consumers’ desires, everything else being equal?
Economics: Industrial Economics Question: In a market that operates under quantity competition there are 2 firms (Cournot duopoly). The inverse demand function is P = A - B Q. The cost structure of firm 1 is given by C1(q1) = F1 + c1 q1 and that of firm 2 is given by C2(q2) = F2 + c2 q2. Prior to competing, the two firms can engage in research at levels (x1, x2) respectively in order to lower their marginal costs. As a result, marginal costs are c1 = c - x1 - β2x2 and c2= C - x2 - β1 X1. where β1 = β2 > ½. Finally, the research costs are F1 = a1 (x1)^2 /2 and F2 = a2 (x2)^2 /2, where a1 > 0 and a2> 0. 1. The Nash Equilibrium research levels are Choices: A. Higher than the cooperative research levels for both firms. B. Higher than cooperative research levels for firm 1 but lower for... C. Lower than the cooperative research levels for both firms. D. Higher than cooperative research levels for firm 2 but lower for... 2. An increase in the value of a2 would Choices: A.…
Scenario 2: Suppose a stream is discovered whose water has remarkable healing powers. You decide to bottle the liquid and sell it. The market demand curve is linear and is given as follows: P = 30-Q The marginal cost to produce this new drink is $3. Refer to Scenario 2. What will be the price of this new drink in the long run if the industry is a Bertrand duopoly? OA. $13.50 OB. $9 OC. $12 O D. $3 OE. None of the above D

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS