The market demand curve for ahomogeneous product is given by p=70-Qwhere Q is the total quantity demanded at aprice p. Suppose that there are two firms inthe market. Each firm has a constant marginalcost of 10, and there are no fixed costs.What price and firm output levels does theBertrand model of competition predict? Howmuch profit does each firm make inequilibrium?NO PLAGIARISED CONTENT PLEASE

Market demand curve for homogeneous product is given by:- P=70-Q where; Q= quantity demanded P=…

Answered: The market demand curve for a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the market demand and supply for widgets: QP = 200-2P; QS = 3P – 180 (1) (a) If the market is perfectly competitive, find the equilibrium price and quantity, and find the consumer and producer surplus. (b) If the market has only one producer, whose cost function is TC 60Q+Q², find the equilibrium quantity and price, and find the consumer and producer surplus. (c) Based on (b), now suppose that the government imposes a $4 tax on per unit consumption. Find the new equilibrium price and quantity, the consumer and producer surplus, and the government revenue if the tax is imposed on the monopoly.
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497 + 4q3, A firm in the competitive market produces two goods, 1 and 2. The firm face a cost function C(q1, 92) where q1 and q2 are the quantity of good 1 and 2 produced by the firm respectively. The price of good 1 is 8 and the price of good 2 is 4. What is the profit maximizing production quantity for the firm? 1 a. q1 = 1, 92 = b. q1 = 1, q2 = 1 c. 91 = , 92 = 1 d. q1 = 0, q2 = 0
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a) Find the long run equilibrium price. Find the minimum efficient scale of the typical firm. Find the typical firm’s average cost when it operates at minimum efficient scale. In the long run, what price will prevail in this market? In words, clearly justify your answer. Suppose demand is QD = 3,200 – 100P. (b) Explain why you expect the number of firms in this market to be fifty-five. In this market, what is the short run supply function of the typical firm? What is the short run market supply function? Suppose the local government introduced a $90 licensing fee that raised the fixed cost from $160 to $250. c) Would the introduction of the licensing fee affect the short run equilibrium price or quantity? Justify your answer? Clearly explain why you expect that in the long run fewer larger firms will operate in this market. After the introduction of the licensing fee, what is the new long run equilibrium price? How many firms will survive in this market?
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