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Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy construction material to the heights required for high-rise construction projects the Northwest. No other suppliers have the equipment necessary to perform these lifts. The market inverse demand for these services is given below. P=800-80 where P is price per lift and Q is total number of lifts per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC₁=30² TVC =5Q In the work that follows, you may round all your results to 2 decimal places to reduce the clutter

Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy construction material to the heights required for high-rise construction projects the Northwest. No other suppliers have the equipment necessary to perform these lifts. The market inverse demand for these services is given below. P=800-80 where P is price per lift and Q is total number of lifts per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC₁=30² TVC =5Q In the work that follows, you may round all your results to 2 decimal places to reduce the clutter

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy construction material to the heights required for high-rise construction projects the Northwest. No other suppliers have the equipment necessary to perform these lifts. The market inverse demand for these services is given below. P=800-80 where P is price per lift and Q is total number of lifts per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC₁ = 30 TVC,=5Q In the work that follows, you may round all your results to 2 decimal places to reduce the clutter in your answers. a. Currently the market operates as a two-firm Cournot duopoly. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. b. Suppose that Able had entered this market first and had a first-mover advantage. In this case we would expect the Stackelberg outcome. Determine the market equilibrium price-output solutions for each firm including their respective profits. c. Summarize the results of your findings over the two possible outcomes. In your summary include price, quantity, and industry profits. Comment on your results.
Transcribed Image Text:Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy construction material to the heights required for high-rise construction projects the Northwest. No other suppliers have the equipment necessary to perform these lifts. The market inverse demand for these services is given below. P=800-80 where P is price per lift and Q is total number of lifts per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC₁ = 30 TVC,=5Q In the work that follows, you may round all your results to 2 decimal places to reduce the clutter in your answers. a. Currently the market operates as a two-firm Cournot duopoly. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. b. Suppose that Able had entered this market first and had a first-mover advantage. In this case we would expect the Stackelberg outcome. Determine the market equilibrium price-output solutions for each firm including their respective profits. c. Summarize the results of your findings over the two possible outcomes. In your summary include price, quantity, and industry profits. Comment on your results.
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