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Consider an imperfectly competitive service provider,
Muscat Automotive Repair Services (MARS), whose total cost of production is C = 30Q+
0.165Q
2
. Also, MARS faces two different market segments, A and B, whose demands can be
linearly expressed as QA = 240 - PA and QB = 120 - 0. 5PB. (Hint: the marginal cost is the
slope of the total cost function).
1. Under a single-
price and quantity.
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- The market demand for a type of good has been estimated as: P= 40 - 0.25Q, where Pis price ($) and Q is rate of sales per month. The long run market supply is expressed as: P 10.0 + 0.05Q. %3D There is a firm operating in this market that is characterized by following long run marginal cost: MC = - 20.0 + 5.0q What would be the return to firm specific advantage for this firm? O. 66.24 O. 44.15 O. 82.5 O. 33.72 O. 14.75 O. 54.25 O. 62.17I need help with question 8 as I am not sure how to identify the oppurtnity cost on the graph.Consider an industry with 2 firms engaging in quantity competition and facing the market demand function as Q = 200 – 4P. Suppose each firm bears the same cost production as C(q) = 100 + 0.25q? when producing q units. a. Derive Firm 1's best response function, q1(q2), against Firm 2's output level choice, q2. b. Find the equilibrium output level of Firm 1 at the N.E. equilibrium. c. Find the deadweight loss caused by the duopoly. d. Find again the equilibrium output level of Firm 1 if it acts as the leader while Firm 2 as the follower.
- Suppose that the inverse demand for aloe juice in Greece is given by P = 100 – 2Q, where P is the price per bottle (1000ml) of aloe juice and Q is the total quantity, i.e., number of bottles, supplied in the market. There are two aloe juice manufacturers in Greece, Aloe Health and Aloe Wealth, operating under similar cost conditions. Each manufacturer's cost function is C(q) = 4qi, i =1,2, where q¡ is the manufacturer's individual quantity produced and Q = qı + q2. (a) Based on demand conditions every year, they decide, independently of each other, the quantity of aloe juice that will be supplied, letting the market determine the price per bottle. Find the equilibrium price and each firm's profit in this market. %3D (b) Consider that the above two manufacturers form a cartel, agreeing to fix their total quantity in such a way that the market maintains a collusive price. For simplicity, the eventual cartel directory will determine the target total-quantity and price pair, and each firm…You are the manager of Taurus Technologies, and your sole competitor is Spyder Technologies. The two firms' products are viewed as identical by most consumers. The relevant cost functions are C(Q) = 4Q;, and the inverse market demand curve for this unique product is given by P= 100 -2 Q. Currently, you and your rival simultaneously (but independently) make production decisions, and the price you fetch for the product depends on the total amount produced by each firm. However, by making an unrecoverable fixed investment of $200, Taurus Technologies can bring its product to market before Spyder finalizes production plans. (Assume Taurus Technologies is the leader in this scenario.) What are your profits if you do not make the investment? $ What are your profits if you do make the investment? Instructions: Do not include the investment of $200 as part of your profit calculation. $ Should you invest the $200? O Yes - the cost of establishing the first-mover advantage exceeds the benefits.…urgent part 1 2 3 David’s utility function for good X and Y is given by U (x, y) = x2 y3 . Where Px, Py and I are the price of good X, price of good Y and consumer income respectively. i. Write the budget equation of the consumer and draw the line of this equation. ii. Using the budget line drawn in (i) show the effect of a 100 percent increase in the price of good X hold the price of good Y and income constant. iii. Using the budget line drawn in (i) show the effect of a 100 percent increase in his income holding the price of both goods constant. iv. What combination of X and Y maximizes the consumer’s utility at I=100, Px = 4 and Py = 5. v. Calculate the marginal rate of substitution between X and Y at equilibrium and interpret your results vi. Suppose all prices double and income is held constant, what is the effect of this on the optimal combination of X and Y? vii. What happens to the optimal combination of X and Y if price of good X decreases to 2 whiles the price of good Y and…
- Consider a market where two firms produce the same product, and compete by choosing the price to charge consumers. There are no capacity constraints and no fixed costs. Consumers purchase from the firm that charges the lowest price, Pmin Aggregate demand is given by Q(Pmin) = 600 – 30pmin. Both firms have marginal costs of c = 15. What is the aggregate quantity produced in this market? And what price do consumers pay? (a) p₁ = = 15, p2 = 20, Q = 150 (b) P1 = P2 = 15, Q = 150 (c) P₁ = P₂ = 20, Q = 0 (d) p₁ = 10, P2 = 15, Q = 300 (e) None of the above options is correct.Consider a local market where there are two local firms, A and B with the following cost functions producing homogenous good: CA=qA² +509A-9B² CB= 2qB² + 70qB+0.25qA² where q4 and qв represent the production levels of firm A and firm B, respectively. The market price of the good produced by two firms is equal to 150. Furthermore, suppose that the two firms act as price-takers (because firms from other locations also serve it). a) Briefly describe the relationship between the two firms (Hint: study the cost structure). b) Find the production levels and the profits of the two firms, assuming that they operate independently. c) Determine the production levels and the profits of the two firms, corresponding to a Pareto- efficient equilibrium in the absence of government intervention. Compare these results with those obtained in the previous point. d) Using the quantities calculated in point c) find the level of taxes and subsidies which would allow to reach the Pareto efficient…Ecotripper Enterprises is the sole producer of Sunblast solar-powered skateboards, “The green alternative”. Market demand for Sunblasts is given by the formula: P=120-0.5Q, where p is in $ per skateboard and Q in skateboards per week. Total costs, in $ per week, are given by: TC=100+20Q, and marginal cost (MC) equal 20. a.) Derive the marginal revenue function and calculate the profit-maximizing price, quantity sold and the profit. b.) If the government imposes a price ceiling of $ 65 per skateboard, what is the effect on the equilibrium and the values derived in a.)? c.) If the government wanted Ecotripper to produce the socially efficient quantity of skateboards, what price ceiling could it set in the short run? What would the result be in the long run? d.) If the government decided to set the price ceiling so that consumer surplus was maximized subject to Ecotripper earning zero profits, what would be the level of the price ceiling, the quantity sold and the consumer surplus?
- Consider an industry with N firms that compete by setting the quantities of an identical product simultaneously. The resulting market price is given by: p = 1000 − 4Q. The total cost function of each firm is C(qi) = 50 + 20qi . (a) Derive the output reaction of firm i to the belief that its rivals are jointly producing a total output of Q-i . Assuming that every firm produces the same quantity in equilibrium, use your answer to compute that quantity. (b) Suppose firms would enter (exit) this industry if the existing firms were making a profit (loss). Write down a mathematical equation, the solution to which would give you the equilibrium number of firms in this industry. You don’t have to solve this equation.An industry has the following cost function: C(X, Y ) = 1500+20X +20Y . Market demands for the 2 goods are given by PX =80−X, and PY =140−2Y Suppose the government wished to use two part tariffs in these markets, and suppose further that two part tariffs are feasible. Imagine that there are 10 consumer in each market. Solve for a set of two part tariffs (one for each martket) that pay the firm zero profits in total, yet achieves efficiency.You are the manager of a firm that produces a product according to the cost function C(qi) = 210 +62q; – 8q? + q? . Determine the short-run supply function if: a) You operate a perfectly competitive business. b) You operate a monopoly. c) You operate a monopolistically competitive business.