ECO 461 Lecture Notes - Lecture 2: Pareto Efficiency, Form 10-Q, Marginal Revenue

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2 Nov 2017

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Firm i"s production is denoted by qi and total market production is denoted by q where. X i=1 qi where n is the number of rms. A rm"s cost function is denoted by ci(qi) = p (qi) + p (qi) qi: tr(qi) = p qi, mr(qi) , mci(qi) = Ci(qi) qi: (qi) = tr(qi) ci(qi) The intersection of atc and mc occurs at the minimum of atc. In perfect competition, the rm"s decision is similar, but slightly di erent. In the long-run, p = mr = mc = atc. Suppose there are n = 100 rms in a perfectly competitive market. Each rm"s marginal cost function is de ned by mc(qi) = 2qi + 3. Suppose that in a perfectly competitive market n = 50. Suppose that a monopolist faces: find rm marginal revenue. C(q) = 100 + 10q + 1/50q2: find q , p , and . If q and p denote the market quantity and price respectively then.

Related Questions

The market for authentic poutine in Vancouver is controlled by two shops, PierrePoutine (i = P) and MeanPoutine (i = M). The market demand is given by p = 12âq, where p is the price, and q is aggregate output. Both shops produce at constant marginal cost of $ 2 per dish of poutine.

a) Suppose first that each firm i = 1, 2 chooses its output qi , taking the output of the other firm as given [Cournot Competition]. Aggregate output is thus q = qP + qM. Determine the best-response functions q br 1 (q2) and q br 2 (q1). Calculate the Nash equilibrium quantities, the market price, and profits (Note that everything is symmetric here).

b) Now suppose firm i = 1,2 chooses its price pi , taking the price of the other firm as given [Bertrand Competition]. Give the Nash equilibrium prices and quantities. Explain carefully why i) this is a Nash equilibrium and why ii) there is no other equilibrium. Note: most of the credit will be for your explanation.

c) What if Pierre Poutine finds a cheaper cheese curd supplier, which reduces its marginal cost to $1 instead (MeanPoutine continues to have $ 2 production cost). Assuming that prices are quoted in dollars and cents (the smallest unit of measurement is a cent), determine new Nash equilibrium prices and quantities for the Bertrand Competition situation. Explain!

Q. Suppose the market demand function is given by Q=100-2P, where Q: total quantity, P: market price. And in this market, there are two firms with MC=AV= $10. Find each of the following:

1. Perfect competition price, quantity, and consumer surplus?

2. Monopoly price, quantity, consumer surplus, profit, and welfare loss?

3. Cournot price, quantity, consumer surplus, each firm`s profit, and welfare loss?

4. Stackelberg price, quantity, consumer surplus, each firm`s profit, and welfare loss?

5. Collusion quantity, profit from collusion?

raspberryllama571

Given following Price and Total Cost functions:

P = 120 - 7Q

TC = 40 + 70Q - 10Q² + 0.6Q³

Where P = price, and Q is output.

Fill in the table below and answer the questions below the table.

Q	P	FC	TVC	TC	TR	Profit
0
1
2
3
4
5
6
7
8
9
10

If your company's goal is to maximize profit, answer the following questions below:

What price will you charge for your product?

What quantity will you produce?

And what would be your maximum profit or minimum loss at the price and output you chose?

2. If your company's goal is to maximize total revenue, answer the following questions below:

What price will you charge for your product?

What quantity will you produce?

And what would be your maximum total revenue at the price and output you chose? (3 points)

Question 3

Given a firm with the following cost data, fill in the table below.

Q = OUTPUT TFC = Total Fixed Cost AVC = Average Variable Cost ATC = Average Total Cost TVC = Total Variable Cost MC = Marginal Cost TC = Total Cost

Q	FC	TVC	TC	AVC	ATC	MC
0				---	---	---
1						10
2
3				10		10
4

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ECO 461 Lecture Notes - Lecture 2: Pareto Efficiency, Form 10-Q, Marginal Revenue

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