How much demand would a monopolist produce

Assignment Help Econometrics

Reference no: EM13223257

Two large firms are about to enter the market for a new pain reliever. Suppose that the demand curve is given by:

Q = 2600 -400 P

Where Q = number of bottles
And P = price per bottle
This means that the marginal revenue function is given by:

MR = 6.5 - 0.005 Q

The marginal cost of producing the pain reliever is a constant $2.00 per bottle.

a. How much would a monopolist produce? What would she charge?

b. What would the output and price be if the market consisted of a Cournot duopoly (each firm having MC = 2 dollars)?

Firm 1's Marginal Revenue curve would be
MR1 = 6.5 - 0.005Q1 - 0.0025Q2
Firm 2's would be
MR2 = 6.5 - 0.005Q2 - 0.0025Q1

You can solve this either algebraically or graphically.

c. What would the output and price be under perfect competition?

Reference no: EM13223257

Questions Cloud

Improvements to the organizations marketing effort : Executive Summary with key findings and recommendations and clear and concise description of the market in which the organization operates

Explain a chemical equation for a reaction : Provide a chemical equation for a reaction that could be used to form each ether, and provide reaction conditions that can be used to remove each protecting group.

Summarize the major advantages and limitations of a conjoint : Summarize the major advantages and limitations of a conjoint study for new product design.

What opportunities for skills transfer : Sara Lee Corporation 2011 What value-chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?

How much demand would a monopolist produce : Two large firms are about to enter the market for a new pain reliever. Suppose that the demand curve is given by: Q = 2600 -400 P Where Q = number of bottles And P = price per bottle This means that the marginal revenue function is given by: MR = 6.5..

Explain the oxidation of cyclohexanol to cyclohexanone : Provide some diagnostically useful differences you would expect in the IR spectra between starting materials and product for the reaction you carried out (e.g. if I was asked this regarding the oxidation of cyclohexanol to cyclohexanone

The cheesecake factorys overall market potential : What are your views regarding The Cheesecake Factory's overall market potential and what kind of potential market base does The Cheesecake Factory has in smaller cities and towns as compared to bigger markets?

Why change is an essential process for businesses : explain why change is an essential process for businesses to be competitive. in what ways must businesses keep changing?

Determine what is the firms current profit : At its current level of production, a profit-maximizing firm in a competitive market receives $12.50 for each unit it produces and faces an average total cost of $10. At the market price of $12.50 per unit, the firm's marginal cost curve crosses t..

User Account

All Pages