You are a new entrant in a market with just one Incumbent, who sells a roughly equivalent product. You Initially take on the followerrole when it comes to choosing the amount of your product to manufacture. In researching your market, you've collected substantialdata on prices and quantities, and asked your firm's analysts to determine as closely as possible the Inverse demand curve for themarket. They've reported back to you the following table.Price regressed on quantityCoefficientsstandard Errort-statP-value4.68992E-791.55351E-60Upper 9st14718.05261Louer 95%InterceptQuantity13693.75315516.33538726.52104329-21.1810s89612677.45369-2.1445495280.101248313-2.3438359-1.945263156Instruction: 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 significantb. Suppose your marginal costs are $2.000 and the Incumbent produces 4,000 units. What is the profit maximizing quantity you shouldproduce?unitsc 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 theIncumbent produce at your respective profit maximizing levels?

A Duopoly Market is defined as a market where there are two or more sellers. There are three types…

Answered: You are a new entrant in a market with…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Joe has just moved to a small town with only one golf course, the Northlands Golf Club. His inverse demand function is p=140-2q, where q is the number of rounds of golf that he plays per year. The manager of the Northlands Club negotiates separately with each person who joins the club and can therefore charge individual prices. This manager has a good idea of what Joe's demand curve is and offers Joe a special deal, where Joe pays an annual membership fee and can play as many rounds as he wants at $20, which is the marginal cost his round imposes on the Club. Joe marries Susan, who is also an enthusiastic golfer. Susan wants to join the Northlands Club. The manager believes that Susan's inverse demand curve is p=120-2q. The manager has a policy of offering each member of a married couple the same two-part prices, so he offers them both a new deal. What two-part pricing deal maximizes the club's profit? Will this new pricing have a higher or lower access fee than in Joe's original deal?…
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Question: As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. There is a 60 percent chance of low demand and a 40 percent chance of high demand. The corresponding (inverse) demand functions for these two scenarios are P = 300,000 − 400Q and P = 500,000 − 275Q, respectively. Your cost function is C(Q) = 140,000 + 240,000Q. How many new homes should you build, and what profits can you expect?
A firm sells its product to two groups of buyers: daytime buyers and nighttime buyers. There are 50 daytime buyers, all of whom have identical demands given by DD in the figure. There are 50 nighttime buyers, all of whom have identical demands given by DN in the figure. The firm's variable costs are constant (SMC = AVC = $12) and its total fixed cost is $250,000. The marketing director must devise a two-part pricing plan that will maximize the firm's profit. Price and cost ($ per unit) 100 12 0 Do: PD 100 -0.5Q, Multiple Choice Quantity Panel A - One Daytime buyer's demand A* = $1,472 A* = $2,178 A* = $3,872 SMC = AVC A* = $4,356 200 A* = $7,744 100 Assuming both daytime and nighttime markets are served, the optimal fixed access charge (4*) is 0 DN: PN 100 - QN SMC=AVC 100 Quantity Panel B - One Nighttime buyer's demand
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