The demand for a monopoly seafood restaurant’s lunch is estimated to be: Q = 200 – P Assume TC = 10Q What price and quantity maximize profit assuming the firm charges the same price to all customers? Show all work. Draw the graph to illustrate.
1. The
Q = 200 – P
Assume TC = 10Q
- What
price and quantity maximize profit assuming the firm charges the same price to all customers? Show all work. Draw the graph to illustrate.
2. Now suppose a second seafood restaurant opens across the street. There are now two firms. The products are differentiated so that
Demand for firm 1’s product: Q1 = 100 – p1 +(1/2)p2
Demand for firm 2’s product: Q2 = 100 – p2 + (1/2)p1
And TC1 = 10Q1; TC2 = 10Q2
Assuming both firms behave as Bertrand duopolists, solve for p1 and p2. Show all work. Graph the reaction functions.
3) Suppose that in response to the presence of a superior competitor, firms polished its image and improved. As a result:
Demand for firm 1’s product: Q1 = 160 – p1 +(1/2)p2
Demand for firm 2’s product: Q2 = 160 – p2 + (1/2)p1
And TC1 = 20Q1; TC2 = 20Q2
Assuming both firms behave as Bertrand duopolists, solve for p1 and p2. Show all work. Graph the reaction functions.
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613040/9781337613040_smallCoverImage.gif)
![Economics:](https://www.bartleby.com/isbn_cover_images/9781285859460/9781285859460_smallCoverImage.gif)
![Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781337617383/9781337617383_smallCoverImage.gif)
![Microeconomics](https://www.bartleby.com/isbn_cover_images/9781337617406/9781337617406_smallCoverImage.gif)