Only two firms, Acme and Stuff Inc., sell a particular product. The table below shows the demand curve for their product. Each firm has the same constant marginal cost of $10 and zero fixed cost (so MC-ATC=$10). Price Quantity Total Revenues 10 70 65 60 55 50 45 40 38282 35 30 25 20 15 10 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 15 10 If Acme and Stuff Inc. are able to collude, how much will Acme produce? 6500 12000 16500 20000 22500 24000 24500 24000 22500 20000 16500 12000 6500 0
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- A publisher faces the following demand schedule for the next novel from one of its popular authors:Price Quantity Demanded100 090 100,00080 200,00070 300,00060 400,00050 500,00040 600,000 530 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishing the book is a constant $30 per book.d. In your graph, shade in the deadweight loss. Explain in words what this means. e. If the author was paid $3 million instead of $2 million to write the book, how would this affectthe publisher’s decision regarding the price to charge? Explain. f. Suppose the publisher was not profit-maximizing but was concerned with maximizing economicefficiency. What price would it charge for the book? How much profit would it make at thisprice? (Price (dollars per unit) 600 400 AC = MC De mand Marginal revenue 200 400 Computers (units per day) The graph above shows the average cost, marginal cost, demand, and marginal revenue curves for selling computers in a given market. The computer industry is currently perfectly competitive and in equilibrium. Suppose all firms in the industry are taken over by a single firm that establishes a monopoly in the market. Assuming the monopoly maximizes profit, Select one: there will be no effect on the price of computers. Ob. the price of computers will increase from $400 to $600, but there will be no change in quantity demanded. Oc. the price of computers will be set equal to the marginal cost of computers. O d the price of computers will increase from $400 to $600, and the quantity demanded will fall from 400 to 200 per day.Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the demand and the costs for Sol-Motors. Costs and revenues (in thousands) 130 120 110 100 90 80 70 60 50 40 30 20 10 0 Price: $ 15. 45 75 9010512013550165180195 30 60 Quantity per period (in thousands) MC D thousands a. Add the marginal revenue curve to the graph above (starting at zero). Plot only the end points. b. What are Sol-Motors' profit-maximizing output and price? Output: thousands Tools MR K c. Suppose that the government of Lidia imposes a price ceiling of $35,000 per car. What is the firm's profit-maximizing output now? Profit-maximizing output: thousands d. What would be the output if the graph represented a perfectly competitive industry rather than a monopoly? Output: thousands
- Table 17-4 Only two firms, ABC and XYZ, sell a particular product. The following table shows the demand curve for their product. Each firm has the same constant marginal cost of $8 and zero fixed cost. Price Quantity Total Demanded Revenue (Dollars per unit) (Units) (Dollars) 28 26 130 24 10 240 22 15 330 20 20 400 18 25 450 16 30 480 14 35 490 12 40 480 10 45 450 8 50 400 55 330 4 60 240 2 65 130 70 Refer to Table 17-4. If this market were perfectly competitive instead of oligopolistic, what quantity would be produced? а. 25 b. 50 С. 35 d. 70 O O O OA friend has just started up her own business. Her firm asks you how much to charge for her product to maximize profits. The demand schedule for it is given by the first two columns in the table below; its total costs are given in the third column. For each level of output, you can calculate total revenue, marginal revenue, average cost, and marginal cost. The profit-maximizing level of output can be found at the point where TR - TC is greatest, or where MR = MC, (or the last quantity where MR is still greater than MC.) What is the profit-maximizing level of output for her product? 40 How much will she earn in profits? 80 Price Quantity TC TR? MR? MC? $25.00 0 $130 $24.00 10 $275 $23.00 20 $435 $22.50 30 $610 $22.00 40 $800 $21.60 50 $1,005 $21.20 60 $1,225The daily demand for bungee jumping over a river in South Africa is given by Q=5000-200P. There are two firms operating and the first one has a daily capacity of 600 people and the second one of 400 people. The marginal cost of operation is 5 for both firms. The two firms compete in prices and announce their prices simultaneously. Calculate the price and profits of both firms.
- Suppose that you are a manager for a firm like EBC Brakes, which manufactures brakes for automobiles and motorcycles. Your company has two plants, one in the United States and the other in the United Kingdom. The following tables include estimated demand and marginal revenue for your brakes, along with the marginal costs at the two factories. what quantity and price maximize your firms profit? What is the profit – maximizing number of brakes produced in the U.S. plant? In the U.K. plant? Quantity Demanded (brakes per hour) Price (dollars per brake) Quantity Produced in the U.K. plant (brakes per hour) Quantity Produced in the U.S. (brakes per hour) Total Quantity Produced Marginal Cost (dollars per brake) Marginal Revenue (dollars per brake) 104 196 47 42 89 66 92 105 195 48 44 92 68 90 106 194 49 46 95 70 88 107 193 50 48 98 72 86 108 192 51 50 101 74 84 109 191 52 52 104…Based on market research, a film production company in Ectenia obtains the following information about the demand and production costs of its new DVD Demand :P =1000-10Q Total Revenue : TR=1000Q-10Q2 Marginal Revenue: MR=1000-20Q Marginal Cost: MC=100+10Q Where Q indicates the number of copies sold and P is the price in Ectenian dollasrs. a. Find the price and quantity that maximize the company's profit b. Find the price and quantity that would maximize social welfare c. Calculate the deadweight loss from monpoly. d. Suppose in addition to the costs above. the director of the film has to be paid. The company is considering four options i. a flat fee of 2000 Ectenian dollars ii. 50 percent of the profits. iii. 150 Ectenian dollars per unit sold iv. 50 percent of the revenue. For each option, calculate the profit-maximizing price and quantity. Which if any of these compensation schemes would alter the deadweight loss from monopoly. Explain.There are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?
- 7. Changes in net revenue from price discrimination Consider the market for airline tickets on WestEast Airlines from Seattle to Chicago. The following graph shows the demand curve, marginal revenue (MR) curve, and marginal cost (MC) curve for this particular flight. In particular, the cost of adding another passenger to an otherwise empty seat is constant at $150. For simplicity, assume throughout this question that there are no supply constraints caused by seating capacity limitations. Suppose WestEast Airlines sells each seat on the plane for the same price. А-Z Place the purple point (diamond symbol) on the graph at the profit-maximizing price and quantity. Dashed drop lines will automatically extend to both axes. Then, place the grey rectangle (star symbols) to shade the area representing net operating revenue at the profit-maximizing price and quantity. (?) 500 Profit Max. 400 bongo 300 Net Revenue 200 MC 100 MR Demand 40 80 120 160 200 QUANTITY (Passengers per flight) Suppose…Most smartphones in the United States use Apple's IOS or Google's Android operating system. What market structure applies to the market for smartphone operating systems? Why?A6 In Changlun, Kedah, there are two bakers, Abu and Bakar. Their bread taste the same and nobody can tell the difference. Abu has constant marginal costs of RM1 per loaf of bread. Bakar has constant marginal costs of RM2 per loaf. Fixed costs are zero for both of them. The inverse demand function for bread in Changlun is p(q) = 6 – 0.01(qA + qB), where q is the total number of loaves sold per day. Find the reaction function for Abu and Bakar. What is the Cournot Nash equilibrium number of loaves of bread for each baker?