Plot on the same graph the equilibrium market price

Assignment Help Business Economics

Reference no: EM131001893

Wolfe and Baker are the only two firms producing door stopers because of such a small market in their area. Both firms have a marginal cost (MC) of $8 and no fixed cost (FC = $0). The demand for door stopers is given by function P = 32 - Q, where P is in dollars and Q is in thousands of door stopers. Because of only two producers in the markt, the total quantity in the market is given by Q = Qm + Qn, where Qm is the number of door stopers that Wolfe produces and Qn is the number of door stopers Baker produces.

BOTH Wolfe and Baker Simultaneously choose what price to Set. Consumers will buy door stopers from the firm with the Lowest Price. If both firms have Equal prices, half will buy from Wolfe and half will buy from Baker, so this market is a Bertrand Duopoly.

A. Plot on a graph Wolfe and Baker's Marginal Cost (MC).

B. Plot on the same graph the Equilibrium Market Price.

C. Baker will choose (the same price as, a higher price than, or a lower price than) Wolfe?

D. When Wolfe and Baker are Price Setters, the Equilibrium Market Price will be ($8, $14, $16, $20, $24). The total equilibrium market quantity will be (12,000, 16,000, 18,000, 24,000, 28,000) door stopers. In equilibrium, Wolfe and Baker will Each produce (6,000, 8,000, 9,000, 12,000, 14,000) door stopers and make a profit of ($0, $36,000, $64,000, $72,000, $108,000).

E. When Wolfe and Baker are Price Setters, the total equilibrium market quantity produced will be (less than, more than, or the same as) the total equilibrium market quantity produced if the Market WERE perfectly competitive.

Reference no: EM131001893

Questions Cloud

Financial burden an anomalous catastrophic event : As our texts indicates, a "loss ratio" can be used to measure an insurer's financial well-being as it reflects the percentage of premiums being used to pay covered losses. Imagine you were the CEO of The Best Insurance Company, Inc. Given what you no..

Suppose the monopolist only sold the goods separately : Consumer A values good 1 at $4,500 and good 2 at $1,500. Consumer B values good 1 at $5,000 and good 2 at $1,000. Costs are zero. Suppose the monopolist only sold the goods separately. What prices will the monopolist charge for good 1 to maximize rev..

What prices will the monopolist charge for good : Consumer A values good 1 at $4,500 and good 2 at $1,500. Consumer B values good 1 at $5,000 and good 2 at $1,000. Costs are zero. Suppose the monopolist only sold the goods separately. What prices will the monopolist charge for good 2 to maximize rev..

Denote return for a portfolio consists of two assets : Let R denote return for a portfolio consists of two assets R=WR1+(1-w)R2. show that in the minimum variance portfolio risk asset gets low wieght adjusted by covariance with return if this asset ? for two incorrelated assets weights of portfolio which..

Plot on the same graph the equilibrium market price : Wolfe and Baker are the only two firms producing door stopers because of such a small market in their area. Both firms have a marginal cost (MC) of $8 and no fixed cost (FC = $0). The demand for door stopers is given by function P = 32 - Q, where P i..

Two different times of day using supply and demand curves : At an urban college where most students commute to classes, there are 8,000 parking spaces for students. All students pay $150 a semester for a pass that allows them to park in any one of those 8,000 spaces. Illustrate the parking situation for these..

Affect the equilibrium price and quantity of wood tables : Using demand and supply curves, illustrate and explain how the following would affect the equilibrium price and quantity of wood tables.

Cigarette producer advertising expenditures : Consider the following annual data on approximate cigarette sales and cigarette producer advertising expenditures over the 1986-1990 period: Discussing the direction of the relationship between the two variables and ii) discussing whether or not the ..

Difference in diminishing returns-decreasing return to scale : What is the difference between diminishing returns and decreasing returns to scale? Why are cost curves U-shaped in the short run?

User Account

All Pages