(1) You are the manager of a firm that competes against four other firms by bidding for government contracts. While you believe yourproduct is better than the competition, the government purchasing agent views the products as identical and purchases from the firmoffering the best price. Total government demand is Q-1200-4P and all five firms produce at a constant marginal cost of $60. Forsecurity reasons, the government has imposed restrictions that permit a maximum of five firms to compete in this market, thus entry bynew firms is prohibited. A member of Congress is concerned because no restrictions have been placed on the price that thegovernment pays for this product. In response, she has proposed legislation that would award each existing firm 20 percent of acontract for 880 units at a contracted price of $80 per unit.If this legislation is passed, by how much should you expect your profits to change?Instructions: If you expect profits to fall, enter a negative (-) number.

An oligopoly is described as a market structure where there are a few firms and a large number of…

margin easons, the government has imposed restrictions that permit a maximum of five firms to compete in this is prohibited. A member of Congress is concerned because no restrictions have been placed on the pa ent pays for this product. In response, she has proposed legislation that would award each existing firms or 880 units at a contracted price of $80 per unit. slation is passed, by how much should you expect your profits to change?

margin easons, the government has imposed restrictions that permit a maximum of five firms to compete in this is prohibited. A member of Congress is concerned because no restrictions have been placed on the pa ent pays for this product. In response, she has proposed legislation that would award each existing firms or 880 units at a contracted price of $80 per unit. slation is passed, by how much should you expect your profits to change?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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