Price is set in a market by a dominant firm price leader (L = Leader). Total Market Demand is P = 10,000-5*QT.QT= 2,000 - .20*P.The dominant firm’s total cost is TCL= 50*QL + 1.5*QL2. The dominant firm’s Quantity Demanded is QL= QT – QF. The competitive fringe supply isSF= PL = 50 + 2QF;QF =-25 + .5*PWhat is the Profit maximizing price set by the dominant firm ?What is the fringe firms’ output ?

Introduction: A dominant firm is one that represents a huge portion of a given market and has a…

Answered: Price is set in a market by a dominant…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Price is set in a market by a dominant firm price leader (L = Leader).
Total Market Demand is
P = 10,000-5*Q_T.
Q_T= 2,000 - .20*P.
The dominant firm’s total cost is
TC_L= 50*Q_L + 1.5*Q_L².
The dominant firm’s Quantity Demanded is
Q_L= Q_T – Q_F.
The competitive fringe supply is
S_F= P_L = 50 + 2Q_F;
Q_F=-25 + .5*P

What is the Profit maximizing price set by the dominant firm ?

What is the fringe firms’ output ?

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