Only two firms, Acme and Stuff Inc., sell a particular product. The table below shows the demand curve for their product. Each firm hasthe same constant marginal cost of $10 and zero fixed cost (so MC-ATC=$10).PriceQuantityTotal Revenues107065605550454028889353025201510150100200300400500600700800900100011001200130014000If Acme and Stuff Inc are able to collude, how much will Acme produce?6500120001650020000225002400024500240002250020000165001200065000

Collusion occurs when rival firms agree to work together . Collusion is a way for firms to make…

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

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

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter10: Strategy: The Quest To Keep Profit From Eroding

Section: Chapter Questions

Problem 1MC

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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?
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?