How would a decrease in demand for commercial air travel in an oglipolistic market effect the market's equilibrium? What would this look like graphically?
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- Consider the competitive market for production of a chemical as shown in the diagram below. This setup will apply to this question and the next two questions. P ($/gallon) Demand: P=220-Q/100 0 Supply: P = Q/400 Q (gallons) Production of this chemical produces noxious odors that impact the health of the communities surrounding the production facilities. It is well known that every gallon produced increases health costs in society, but there is a lot of argument over how much health costs increase. In reality the number is that health costs increase by $3 per gallon produced, but that it hard to discover. If the government does not intervene in this market, what will be the total surplus for society in this market (including the $3 per gallon health costs)? Please do not round at any step of any calculation. Do not round your final answer.Does a market equilibrium exist in an oglipolistic market? If so, how is it determined?Suppose that pig farming in a region is a perfectly compet- itive industry. However, one negative consequence of this activity is that it creates water pollution that adversely affects the health of the residents in the nearby communities that rely on the water sources that are contaminated by the pig farms. The market supply curve for pigs (or hogs) is given by H^S = 6p where H^S is the quantity of hogs supplied to the market by farmers in this region. The market demand for hogs is given by H^P = 300 – 4p. The government estimates that the additional medical costs (M) imposed on the nearby communities is given by M = 5H, where H is the quantity of hogs produced and sold in the market. Q: In the absence of clearly defined property rights over water use or con- ventions or some form of government intervention, derive the market equilibrium for hogs and the DWL resulting from the additional medical costs associated with hog production. Please show the formula, thank you.
- the market demand curve for chocalates is given by the equation Qd=500-4P, while market supply curve for chocalates is described by the equation Qs=-100+2P where P is the price. Find the equilibrium price of chocaltes?Two firms, Incumbent & Entrant, can produce the same good. The market demand for the good is given by P = 180 – Q, where P is the market price and Q is the market quantity demanded. The firms must pay w = 45 per unit of output for labour and r = 45 per unit of output for capital (one unit of capital is used per unit of output), but Incumbent may choose capacity KI units of capital before Entrant decides whether to enter the market. Suppose firms each have fixed costs FI =600, FE=500. Incumbent chooses (as a Stackelberg leader) capacity KI equal to the monopoly profit- maximizing quantity. When you answer the following questions, show your work. a. Would Incumbent be able to prevent entry by choosing capacity KI equal to the monopoly profit-maximizing quantity? Explain. b. What is the Incumbent’s equilibrium choice of capacity KI in this Dixit game? c. Does the Incumbent’s choice of capacity KI in part (b) qualify as predatory conduct (here, limit output)? Explain.Question 3 The inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has al cost of production of C₁= 15*Q₁ and firm 2 has a cost of production of C₂=20*Q₂. 1) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices? What are the profits of firm 1 and 2? 2) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices? What are the profits of firm 1 and 2? 3) Suppose that firm play a Stackelberg game. First firm 1 sets the quantity in t=1, then, knowing which quantity firm 1 has set, firm 2 chooses the quantity in t=2. What are the Stackelberg quantities and prices? What are the profits od firm 1 and 2? Compared to part a) which firm benefits and which firm loses?
- Question 11. Consider the market for flounders (a sort of fish). The demand curve in the northern part of the country is given by QN (P) = 2000-100P while that in the southern part is Qs(P) = 5000-500P. The supply curve for the entire country is Q(P) = 20P. What is the market demand for the entire country (i.e., northern and southern part combined) at a price of P=11 (round to the nearest integer if needed)? a) Q = 199 b) Q =10 c) Q =900 d) Q = 400The widget market is competitive and includes no transaction costs. Five suppliers are willing to sell one widget at the following prices: $26, $14, $10, $5, and $3 (one seller at each price). Five buyers are willing to buy one widget at the following prices: $10, $14, $26, $34, and $42 (one buyer at each price). For each price shown in the following table, use the given information to enter the quantity demanded and quantity supplied. Price Quantity Demanded Quantity Supplied ($ per widget) (widgets) (widgets) $3 $5 $10 $14 $26 $34 $42 In this market, the equilibrium price will be per widget, and the equilibrium quantity will be widgets.Colombia and Brazil are two of the major suppliers of coffee globally, each accounting for the production of roughly 30 percent of all coffee consumed. Suppose that Colombia and Brazil both have the same marginal cost, MCC=20 + 120qc and MCB=20 + 120qB. There are also many smaller coffee producing nations that operate competitively. Suppose that after substracting supply of these smaller nations from global demand, the remaining demand is P= 720-20Q which implies that MR=720-4OQ :Determine the optimal quantity of coffee that Columbia and Brazil should each produce and the global market price they should establish if they collude (you can think of the price being for a 100 kilogram bag of raw coffee beans).
- The three graphs below illustrate the market for electricity. The distribution of electricity is a natural monopoly; therefore, to take advantage of lower production costs, it is efficient to have only one firm in the market. Unfortunately, if a monopoly were allowed to provide electricity, it would charge a higher price and provide a smaller amount of electricity than would be desirable. In other words, the unregulated monopoly would charge the monopoly's profit-maximizing price. To avoid this, the government will allow a single firm to provide electricity, but the government will regulate the price. Let’s compare possible regulatory solutions.In October 2018 Canada agree to open the dairy market to US producers as part of the new NAFTA agreement (USMCA). Use the following information to find the price and the number of firms in each country's market, and the price and number of firms in the aggregate market. Demand function For country i (i=USA or Canada) P, = 6000 + 25 Cost Function C, = 1,000, 000+ 6000 * Q, For country i (i=USA or Canada) Market size • Market size Canada Scananda = 1,000, 000 • Market size USA S,"S= 4,000, 000 The number of firms in Canada is equal to: Answer: Price in Canada is equal to: Answer: Number of firms in USA is equal to: Answer: Price in USA is equal to Answer: Number of firms in the integrated market is equal to: Answer:D1 D2 P2 P1-L Q1 Q2 Company X is a Georgia-based automobile manufacturer that produces a single model of car, the Destiny. Another company, Company Y, produces a car known as the Kismet that is widely viewed by the automobile industry as the Destiny's equal. Which of the following developments would MOST LIKELY lead to the changes illustrated on the graph in the market for the Destiny? a significant decline in the price of the Kismet a significant rise in the income levels of consumers interested in the Destiny
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