Profit-maximising outcome

Assignment Help Macroeconomics
Reference no: EM131104113

Consider a good that requires two separate inputs to complete the final product. Specifically, an initial input A, made by Firm A, must be combined with input B, made by Firm B, who then can sell the completed product to consumers in a market with a demand P = 24 - q. Each firm has a constant marginal cost of production of $2 per input.

a. What is the profit-maximising outcome?

b. What is the outcome if each firm acts as a profit-maximising unit? Explain.

c. Given the relatively poor outcome in (b), Firm A suggests the two firms merge to overcome this problem. Critically evaluate this suggestion. Can you suggest any alternative solutions other than merging?

Reference no: EM131104113

Questions Cloud

What is the definition of unit cell in a lattice : What is the difference between valence electrons in an atom with other electrons - what is the difference between conducting material, semiconductors, and insulators based on their bandgap energy?
Problems for carlos : Problems for Carlos A monopolist faces the followingdemandcurve forits product  Find the price of each package.
Find the domain for each of your two rational expressions : Find the domain for each of your two rational expressions. Write the domain of each rational expression in set notation (as demonstrated in the example).
List two types of transactions : List two types of transactions that would receive different accounting treatment using
Profit-maximising outcome : a. What is the profit-maximising outcome? b. What is the outcome if each firm acts as a profit-maximising unit? Explain.
When wages expense for the year is computed : When wages expense for the year is computed, why are beginning accrued wages subtracted from and ending accrued wages added to, wages paid during the year?
Balance of efforts : Explain this question by balance of efforts, multiple-tasks and incentives are com
Preparation of an income statement and a balance sheet : Why is accrual-basis accounting acceptable for most business enterprises and the cash basis unacceptable in the preparation of an income statement and a balance sheet?
What percentage of the ippizuti fish can you remove : What does the vertical asymptote at x = 100 mean within the context of the problem? What percentage of the Ippizuti fish can you remove for ?40000?

Reviews

Write a Review

Macroeconomics Questions & Answers

  Explain the relation of control with payroll function

A potential control for managing risk of employee fraud is to send employees on mandatory vacations. Describe the relation of that control with payroll function.

  Why is it that firms can earn profits in the long run

Why is it that firms can earn profits in the long run in monopoly and oligopoly but not in monopolistic competition and perfect competition?

  Relation to firms and conditions necessary

Give a comprehensive definition of equilibrium in relation to firms and conditions necessary for it to be realized.

  The price elasticity of demand for a case

Sparkling Water Co. has determined that the price elasticity of demand for a case of its purified water by Michigan residents is -3.0, while the price elasticity of demand by Florida residents is -2.5. Assume that the marginal cost is constant at $8...

  Briefly explain why this is short run production function

At what level of employment would diminishing returns set in for the variable input?

  What are some factors that might influence the economic

The standard of living for the poorest third of the world is falling behind the standard for the rest of the world and is not improving very quickly. What are some factors that might influence the economic status of such countries? What measures coul..

  Using the utility functionu x y xgamma ygamma 0 lt gamma

using the utility functionu x y xgamma ygamma 0 lt gamma lt 1a find income and substitution effects.b does the

  Pollys pet store on the island of atlantis has a local

pollys pet store on the island of atlantis has a local monopoly on the grooming of dogs. there are 1000000 citizens of

  Managerial economics-a problem solving approach

Spend 2 or 3 hours observing the organization in which you are employed. During the observation, identify internal and external interactions of the organization. You can talk to stakeholders who might have information relating to external interact..

  Why is it the case that a firm’s total variable cost curve

Why is it the case that a firm’s total variable cost curve begins at the origin AND slopes upwards from left to right? Explain both scenarios. Be specific.

  Oligopolies and monopolistic competition

In the lesson presented by Sal on Oligopolies and Monopolistic Competition he creates a two dimensional grid of the market types based on number of competitors and degree of product differentiation.  Make sure you view this lesson.

  Investigate the role of the lagrange multiplier in

investigate the role of ? the lagrange multiplier in constrained optimization problems. corn is a fertilizer-intensive

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd