You are a new entrant in a market with just one Incumbent, who sells a roughly equivalent product. You Initially take on the follower role when it comes to choosing the amount of your product to manufacture. In researching your market, you've collected substantial data on prices and quantities, and asked your firm's analysts to determine as closely as possible the Inverse demand curve for the market. They've reported back to you the following table. Price regressed on quantity CoefficientS standard Error t-stat P.value Lower 95t 12677.45369 -2.3438359 Upper 95 Intercept Quantity 13693.75315 -2.144549528 516.335307 26.52104329 -21.18108896 4.68992E-79 14710.05261 0.101248313 1.55351E-60 -1.945263156 Instruction: Round all of your answers to the nearest hundredth. a. Report the estimated inverse demand curve for the market, and comment on whether it is precisely estimated P-[ Both estimated coefficients are statistically significant b. Suppose your marginal costs are $2,000 and the Incumbent produces 4,000 units. What is the profit maximizing quantity you should produce? units C. Suppose your marginal costs are $2,000 and the incumbent's marginal costs are $1,500. What will be the market price if you and the ancumbent produce at your respective profit maximizing levels?
You are a new entrant in a market with just one Incumbent, who sells a roughly equivalent product. You Initially take on the follower role when it comes to choosing the amount of your product to manufacture. In researching your market, you've collected substantial data on prices and quantities, and asked your firm's analysts to determine as closely as possible the Inverse demand curve for the market. They've reported back to you the following table. Price regressed on quantity CoefficientS standard Error t-stat P.value Lower 95t 12677.45369 -2.3438359 Upper 95 Intercept Quantity 13693.75315 -2.144549528 516.335307 26.52104329 -21.18108896 4.68992E-79 14710.05261 0.101248313 1.55351E-60 -1.945263156 Instruction: Round all of your answers to the nearest hundredth. a. Report the estimated inverse demand curve for the market, and comment on whether it is precisely estimated P-[ Both estimated coefficients are statistically significant b. Suppose your marginal costs are $2,000 and the Incumbent produces 4,000 units. What is the profit maximizing quantity you should produce? units C. Suppose your marginal costs are $2,000 and the incumbent's marginal costs are $1,500. What will be the market price if you and the ancumbent produce at your respective profit maximizing levels?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:You are a new entrant in a market with just one Incumbent, who sells a roughly equivalent product. You Initially take on the follower
role when it comes to choosing the amount of your product to manufacture. In researching your market, you've collected substantial
data on prices and quantities, and asked your firm's analysts to determine as closely as possible the Inverse demand curve for the
market. They've reported back to you the following table.
Price regressed on quantity
Coefficients
standard Error
t-stat
P-value
4.68992E-79
1.55351E-60
Upper 9st
14718.05261
Louer 95%
Intercept
Quantity
13693.75315
516.335387
26.52104329
-21.1810s896
12677.45369
-2.144549528
0.101248313
-2.3438359
-1.945263156
Instruction: Round all of your answers to the nearest hundredth.
a. Report the estimated Inverse demand curve for the market, and comment on whether it is precisely estimated.
P=
Both estimated coefficients are statistically significant
b. Suppose your marginal costs are $2.000 and the Incumbent produces 4,000 units. What is the profit maximizing quantity you should
produce?
units
c Suppose your margtnal costs are $2,000 and the incumbent's marginal costs are $1,500. What will be the market price if you and the
Incumbent produce at your respective profit maximizing levels?
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