Estimating optimal output and profit level

Reference no: EM1374288

Assume that the technology of producing widgets is that every company entering the market has the same total cost curve, as follows:

TC=1000+5Q+0.1Q^2
Where : TC=Total cost per unit time
Q=Number of widgets produced per unit time

The market demand for widgets is:
Q=700-8P
Where P=price ($/widget)

a. What is the maximum number of firms that can survive in the market?
b. Suppose that, for whatsoever reason, there are only four firms in the market and, as noted above, they have identical cost curves. Assuming active price competition and no collusion among the firms, find the market supply function.
c. Given the assumptions and market supply function found in part b., above, find (i) the market price; (ii) the total quantity demanded; and (iii) the total cost, total revenue and profit for each firm.
d. Suppose that entry is attempted by a fifth firm, identical to the four firms already active in the market. Assuming that the fifth firm enters, find the new market supply curve.
e. Given the market supply curve of part d., above, find (i) the market price; (ii) the total quantity demanded; and (iii) the total cost, total revenue and profit for each firm.
f. What action could the original four firms take to prevent the entry of the fifth firm?

Reference no: EM1374288

Questions Cloud

Explains the reasons why an organization should take action : explains the reasons why an organization should take action regarding its HRIS based on your assessment of the future

Explain the effect of interest rates on money supply : In the summer of 1997, Congress and president agreed on budget package to balance the federal budget. The contract," signed into law by President Clinton in August as the Taxpayer Relief Act of 1997,

Briefly describe the relationships among financial : Briefly describe the relationships among financial, management and cost accounting. Briefly describe the concept of value chain, balance score card and their functions.

What are the major role of leadership in the development : What are the major role of leadership in the development as well as implementation of strategic choice? How can managers most positively lead their organizations

Estimating optimal output and profit level : Assume that the technology of producing widgets is that every company entering the market has the same total cost curve, as follows; TC=1000+5Q+0.1Q^2

How significant is time management for leaders : How significant is time management for leaders as well as management? What are some good practices to protect goodtime management in the business

Management performance and appraisal need a job account : Management Performance and Appraisal Need a Job Account and Job Evaluation and Job Structure, for college professors (selected jobs or positions- Assistant Professor

Determine the pattern of production and trade : In our treatment of the Ricardian model We have focused on the case of trade involving only two nations. Assume that there are many nations capable of producing two goods

Explain corporate social responsibility methamphetamine : Corporate Social Responsibility Methamphetamine (meth) is an addictive synthetic drug made primarily in small toxic labs (STLs) in homes, tents, barns or hotel rooms.

User Account

All Pages