PROBLEM (7) In a dominant-firm market with market demand Q = 120 -p, the dominant firm has marginal costs MC(q) = q and the fringe consists of 5 firms, each with marginal cost MC(q) =2q. (a) What is the resulting market price? How many units does the dominant firm produce? How many units does each firm in the fringe produce? (b) Given the quantities and the implied market shares in (a), calculate the 4CR and HHI indices for this market
PROBLEM (7) In a dominant-firm market with market demand Q = 120 -p, the dominant firm has marginal costs MC(q) = q and the fringe consists of 5 firms, each with marginal cost MC(q) =2q. (a) What is the resulting market price? How many units does the dominant firm produce? How many units does each firm in the fringe produce? (b) Given the quantities and the implied market shares in (a), calculate the 4CR and HHI indices for this market
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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