Determine profit maximizing output level

Assignment Help Microeconomics

Reference no: EM1374902

Suppose you are the CEO of ClipIt, a paper clip producer. Your firm enjoys a patented technology that allows it to make paper clips faster and at a lower cost than your only rival, FastenIt. Clipit uses this advantage to be the first to choose its profit-maximizing output level in the market. The inverse demand function for paper clips is P=500-2Q, ClipIt's costs are Cc(Qc)=2Qc , and FastenIt's costs are Cf(Qf)=4Qf.

a.What is ClipIt's profit-maximizing output level? FastenIt's?
b.What is the market's equilibrium price?
c.How much profit does each firm earn?
d.Ignoring antitrust considerations, would it be profitable for your firm to merge with FastenIt? If not, explain why not; if so, put together an offer that would permit you to profitably complete the merger.

Reference no: EM1374902

Questions Cloud

Problem related to game theory : Assume that the market for computer chips is dominated through two comapnies: Intel and AMD. Intel has discovered how to make superior chips and is planning whether or not to adopt new technology.

Dividend policy theories : Dividend changes can be used by management as a credible communication tool to signal investors about future earnings under which of the subsequent dividend policy theories?

How should ventus address the developing challenges : How should Ventus address the developing challenges that could potentially derail its growth? What additional challenges are likely to emerge?

Cash flow if brisbane keeps using its current system : Find what is the Year three cash flow if Brisbane keeps using its current system and what is the Year 3 cash flow if Brisbane replaces its current system?

Determine profit maximizing output level : Suppose you are the CEO of ClipIt, a paper clip producer. Your firm enjoys a patented technology that allows it to make paper clips faster and at a lower cost than your only rival, FastenIt.

Employers must not ignore employees starting work early : Employers must not ignore employees starting work early, staying outside scheduled hours, or coming in to work on days off

Find the unknowns for each of the divisions : The Towson Manufacturing Corporation applies overhead on the basis of machine hours. The subsequent divisional information is presented for

Explain what is common law : Complete the subsequent placing it in a single Word document Equally a new manager in your department you are tasked with the job of provided that employee training for members of your department who have connections with the legal department, Exp..

Describe major weakness of the performance report : Describe the major weakness of the performance report and describe clearly why all the variances for the variable expenses are unfavorable (U).

User Account

All Pages