Reference no: EM131055152
Suppose an incumbent firm (A) holds a cost advantage over a potential entrant (B). That is, A and B's total costs are given by:
A: TCA = 100QA, where QA is the quantity A produces
B: TCB = 200QB, where QB is the quantity B produces
Suppose the market demand is Q = 1200 - 2P, where Q is the market quantity and P is the market price.
Initially, suppose A is an incumbent monopolist (i.e., B is currently not in the market), what is the monopoly price, quantity, and profit? Invoking the Sylos Postulate, how much would B want to produce (i.e., B enters the market) if A stuck to the monopoly quantity? What would be A's profit if B entered the market? Now, what would be the limit price A could set to keep B out of the market? What is A's profit at this limit price? Is this a case of blockaded entry, effectively impeded entry, ineffectively impeded entry, or free entry? Explain.
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Present value of investment that has three cash flows
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Equilibrium real gdp for economy
: The economy of Tinseltown has a consumption function of C = 15 + 0.7Y , investment equal to 8, government expenditure equal to 12, exports equal to 20, and an import function of M = 0.2Y. What is equilibrium real GDP for this economy?
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: Initially, suppose A is an incumbent monopolist (i.e., B is currently not in the market), what is the monopoly price, quantity, and profit? Invoking the Sylos Postulate, how much would B want to produce (i.e., B enters the market) if A stuck to t..
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