Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: -Firm A: TC-2Q- -Firm B TC-10+2Q- --(1) -(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. (a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2). (b) Use the plots in Q 1(a) and plots of isoprofit curves valuing Rs. 34,000 and Rs. 60,000 for the two firms to identify any differences in the shape of the two firms' isoprofit curves. Can you provide. an explanation for any differences that may exist? (c) Use the information on both firms to assess whether the higher isoprofit curves would always get closer to the average cost curve as quantity increases. Explain why or why not.

Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: -Firm A: TC-2Q- -Firm B TC-10+2Q- --(1) -(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. (a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2). (b) Use the plots in Q 1(a) and plots of isoprofit curves valuing Rs. 34,000 and Rs. 60,000 for the two firms to identify any differences in the shape of the two firms' isoprofit curves. Can you provide. an explanation for any differences that may exist? (c) Use the information on both firms to assess whether the higher isoprofit curves would always get closer to the average cost curve as quantity increases. Explain why or why not.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Consider two identical countries (H and F) with the same individual firm's inverse demand function:…

A: The objective of the question is to solve the profit function for firms with marginal production…

Q: Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy…

A: Cournot Duopoly Equilibrium and Stackelberg Duopoly Equilibrium are two models used in economics to…

Q: There are two soda firms Apple and Dell in Cournot completion . The market inverse demand is P = 32…

A: Cournot competition is an microeconomic model that explains the behavior of firms operating in an…

Q: Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy…

A: Cournot Duopoly Equilibrium and Stackelberg Duopoly Equilibrium are two models used in economics to…

Q: Output is homogenous and the demand curve P = 448 - Q. There are two firms with identica %3D costs…

A: As it is given to us that P=448-Q C=Qi^2 MC=2Qi

Q: Mr. X and Ms. Y have entered into the following contractual arrangement with D. M. Kreps. Between…

A: In the realm of game theory, Cournot equilibrium denotes a particular form of Nash equilibrium…

Q: Consider a competitive industry. All firmes are identical with Average Total Cost given by:…

A: In a perfectly competitive market, there are a large number of buyers and sellers who take the price…

Q: The demand for a monopolist's two products are determined by the following set of equations…

A: Answer -

Q: You are the manager of Firm B, which competes directly with Fim C to sell telecommunication…

A: The basic Cournot assumption is that each firm chooses its quantity, taking as given the quantity of…

Q: company produces two related products, the demand functions of which are given as 15 2p₂ +3 92 = 11…

A: a) To determine whether the two products are complements or substitutes, we need to examine the…

Q: You are the manager of Taurus Technologies (T), and your sole competitor is Spyder Technologies (S).…

A: Cournot competition is the model that applies when the two firms producing identical goods choose…

Q: The two major producers in the beer industry, Anheuser-Bush (Firm 1) and Grupo Modelo (Firm 2) are…

A: For the level of output and profits when Firm 2 cheats and Firm 1 colludes, firstly we find the…

Q: A firm with market power faces the demand function q = 2,000 – 40P. The firm's marginal cost…

A: Block pricing is a pricing strategy used by companies where the price of a product or service is…

Q: TB MC Qu. 09 - 92 Consider two firms competing... Consider two firms competing to sell a homogeneous…

A: The two firms compete to sell a homogenous productThe inverse demand function is Each firm's cost…

Q: In October 2018 Canada agree to open the dairy market to US producers as part of the new NAFTA…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Q3: Q2: Firms A and B are two firms supplying products in two separate differentiated goods markets.…

A: Cost of Production: Cost of production refers to the total economic cost incurred by a firm to…

Q: Firms A and B are two firms supplying products in two separate differentiated goods markets.…

A: The isoprofit curve of a firm is a locus of different combinations of price (P) and quantity (Q)…

Q: Presently, APlus Transport and Big Movers are the only suppliers of services that haul heavy…

A: Cournot equilibrium is a concept in economics that describes a situation in which two or more firms…

Q: Consider the differentiated goods Bertrand price competition model where firms A and B produce…

A: Bertrand price competition model: Bertrand competition is a type of competition in which two or more…

Q: cost functions

A: Given, There are two firms A and B supplying two separate differentiated good marketsEach firm can…

Q: PROBLEM (3) Consider the differentiated goods Bertrand price competition model where firms A and B…

A: An oligopoly is a kind of market structure in which only a few firms exist. The few dominate the…

Q: The demand for home firm product is given by the inverse demand function: P = 120 −QD. The company’s…

A: In this question we are given with inverse demand function: P = 120 −QD, company's costs are, TC=…

Question

Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets.
Equations (1) and (2) give the total cost functions of the two firms:
- Firm A: TC - 2Q
-(1)
- Firm B TC = 10 + 2Q -
-(2)
Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000.
(a) Explain the relationship between the zero-profit curve and the marginal cost curve for the two
firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2).
(b) Use the plots in Q 1(a) and plots of isoprofit curves valuing Rs. 34,000 and Rs. 60,000 for the two
firms to identify any differences in the shape of the two firms' isoprofit curves. Can you provide
an explanation for any differences that may exist?
(c) Use the information on both firms to assess whether the higher isoprofit curves would always get
closer to the average cost curve as quantity increases. Explain why or why not.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define cost

VIEW

Step 2: Determine MC and zero profit curve

VIEW

Step 3: Draw Isoprofit curves

VIEW

Step 4: Explain validity of statement

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 5 steps with 14 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

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.
There are two firms, Firm 1 and Firm 2. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Q1) = 10 + 4Q1 and C(Q2) = 12 + 16Q2, and the market demand curve for product is given by P = 50 – 4Q. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round values if used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 Duopoly competition Collusion
Continuing from the previous questions where you are a manager of a firm is the exclusive manufacturer of a unique pair of rainbow shorts with demand and cost functions that are Q=100−2P; C=40+2Q2. Now assume that the firm incurs a one-time cost of $10 for a zoning violation. What is the price that the manager should now charge to maximize profits? (Just give the number, no need to include "$")
Additional Problem 3: Assume two companies (C and D) are Cournot duopolists that produce identical products. Demand for the products is given by the following linear demand function: ? = 600 − ?C − ?D where ?C and ?D are the quantities sold by the respective firms and P is the price. Total cost functions for the two companies are ??C= 25,000 +100?C 2 ??D = 20,000 + 125?D c. Determine the equilibrium price and quantities sold by each firm. d.Determine the profits for the market as well as eachfirm.
Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q -----------------------------(1) - Firm B TC = 10 + 2Q -------------------------(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. Question: Explain and draw the relationship between the zero-profit curve and the marginal cost curve for the two firms using the quantity schedule of the two firms and the relevant plots of equations (1) and (2) ? *Please draw diagram and answer asap*
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q -----------------------------(1) - Firm B TC = 10 + 2Q -------------------------(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. Question : Use the information given about firm A above and use appropriate diagrams/figures to explain how the equilibrium will change if it’s cost of production rises to $5?
Eric owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on his property, making a large crater. The event attracts scientists and tourists, and Eric decides to sell nontransferable admission tickets to the meteor crater to both types of visitors: scientists (Market A) and tourists (Market B). The following graphs show daily demand (DD) curves and marginal revenue (MRMR) curves for the two markets. Eric's marginal cost of providing admission tickets is zero. PRICE (Dollars per ticket) 20 18 16 9 09 2 0 0 1 Market A MR 2 3 4 5 6 7 8 QUANTITY (Admission tickets) Pricing Policy Nondiscriminatory Discriminatory D 0 10 Total Revenue (Dollars) PRICE (Dollars per ticket) 20 18 18 14 12 10 8 4 2 0 0 1 low Market B Imagine that at first, Eric charges the same price of $8 per admission in both markets so that the total number of admissions demanded is Tickets. Imagine now that Eric decides to charge a different price in each market. To maximize revenue, Eric…
Q1: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q -----------------------------(1) - Firm B TC = 10 + 2Q -------------------------(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. Question: Use the information given above to assess whether the higher isoprofit curves would always get closer to the average cost curve as quantity increases. Explain why or why not? isoprofit curves valuing $. 34,000 and $ 60,000 on both firms
Problem 2: Presently, APlus Transport and Big Movers are the only suppliers of services that haul heavy construction equipment between jobs within the Midwest. No other suppliers have the equipment necessary to perform the service. The market inverse demand for these hauling services is given below. P = 4,030-4Q where P is price per trip and Q is total number of trips per year. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: a. C. TVC = 300 TVCB = 80QB b. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. d. Assume these two competitors operate as a two-firm Cournot duopoly. Find the reaction functions for each firm. Suppose Big Movers shuts down operations so that APlus now has a monopoly in this market. What is the price, quantity, and profits for APlus after this change? Summarize the results of your findings over the…