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Determine the residual demand function that roach motors

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Reference no: EM132500156

Roach Motors is the dominant used-car dealer in a small Midwestern city. After paying $50,000 for overhead, Roach Motors' cost per car is $500. There are 4 other small used-car lots in this town, but since they are not large enough to purchase cars through the same discount sources as Roach, each firm faces the cost function c(q) = 5000 + 700q +5q2. The demand for used cars is q = 300 -p/10.

a. Determine the residual demand function that Roach Motors is facing in this market.

b. At which level of output will Roach Motors' maximize its profits?

c. How many cars will each of the follower firms supply?

Reference no: EM132500156

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