Two firms, the Alliance Company and the Bangor Corporation, producevision systems. The demand curve for vision systems isP 200,000 - 8(21+Q2where P is the market price Q1 is the number of vision systems produced and sold per month by Alliance, and Q2 is the number of vision systems producedand sold per month by Bangor. Alliance's total cost (in dollars) isTC1 6,000Q1Bangor's total cost (in dollars) isTC2 10,000 Q21. What type of oligopolistic market are the firms in and what are the reaction functions?2. What are the two If managers at these two firms set their own output levels to maximize profit, assuming that managers at the other firm holdconstant their output, what is the equilibrium price?3. What is the output of each firm?4. How much profit do managers at each firm earn?

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Answered: Two firms, the Alliance Company and the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are the manager of the local movie theatre in a small town. Running a movie has a fixed cost of $2,000, but selling an extra ticket (i.e. accommodating an extra viewer) has zero marginal cost. Below are the demand schedules for your two types of customers: Price $ Adults Teens and Seniors 10 50 9 100 8 200 7 200 50 6 300 100 5 350 150 4 400 200 3 400 300 400 300 1 400 300 If you are to charge a single price (i.e., if price discrimination is prohibited), what price would you set for a ticket to maximize profit? How much profit do you make? Price = $ Profit = $ If you were allowed to price-discriminate, what price would you charge for an adult ticket? For senior/teen ticket? How much profit do you make? Price for adults = $ Price for seniors/teens= $ Profit = $
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Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. PRICE (Dollars per pound) 100 90 80 70 80 50 40 30 20 10 0 0 125 250 375 500 825 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Demand Because you know that competitive firms earn Supply (10 firms) True Supply (15 firms) If there were 10 firms in this market, the short-run equilibrium price of rhodium would be $ would . Therefore, in the long run, firms would False Supply (20 firms) per pound. From the graph, you can see that this means there will be ? per pound. At that price,…
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Suppose the European Union (EU) was investigated and proposed a merger between two of the largest distillers of premium Scotch liquor. Based on some economists' definition of the relevant market, the two firms proposing to merge enjoyed a combined market share of about two-thirds, while another firm essentially controlled the remaining share of the market. Additionally, suppose that the (wholesale) market elasticity of demand for Scotch liquor is -1.9 and that it costs $16.90 to produce and distribute each liter of Scotch Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor. Instructions: Do not round Intermediate calculations. Enter your final responses rounded to the nearest penny (two decimal places). Pre-merger price: $ 19:43 Post-merger price: $ 23.02
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DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the quantity of pencilstraded if the firms couldn’t cooperate?
Q5) Distinguish between marginal pricing and cost-plus pricing.
In 1983, Motorola accounted for seventy five percent of the mobile phone market. But by 2019, its market share had shrunk to just 2.2%. In 1983, the Motorola launched one of the world’s first commercially available mobile phones—the DynaTAC 8000X. Motorola went on to launch a few more devices over the next few years and quickly became a dominant player in the emerging industry. In the early days of the market, the company’s only serious competitor was Finnish multinational Nokia. By the mid-1990s, other competitors like Sony and Siemens started to gain some solid footing, which chipped away at Motorola’s dominance. In September 1995, the company’s market share was down to 32.1%. By January 1999, Nokia surpassed Motorola as the leading mobile phone manufacturer, accounting for 21.4% of global market share. That put it just slightly ahead of Motorola’s 20.8%. Describe the market for mobile phones in 1983 and illustrate how equilibrium price and quantity determined in this industry and…
Suppose the European Union (EU) was investigated and proposed a merger between two of the largest distillers of premium Scotch liquor. Based on some economists’ definition of the relevant market, the two firms proposing to merge enjoyed a combined market share of about two-thirds, while another firm essentially controlled the remaining share of the market. Additionally, suppose that the (wholesale) market elasticity of demand for Scotch liquor is −1.4 and that it costs $14.80 to produce and distribute each liter of Scotch.Based only on these data, provide quantitative estimates of the likely pre- and postmerger prices in the wholesale market for premium Scotch liquor.Instructions: Do not round intermediate calculations. Enter your final responses rounded to the nearest penny (two decimal places).Pre-merger price: $ Post-merger price: $

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