Same constant marginal cost of production

Assignment Help Business Economics

Reference no: EM131387953

Suppose there are two identical firms producing Kale Pops, Anvil and Bale. They both have the same constant marginal cost of production of $2 and face the market demand curve Qd= 100-P. Each firm knows everything about each other. The only difference is that Anvil chooses how much it will make first, and once Anvil chooses, Anvil can not change that decision.

-What will Anvil choose?

-What will the other firm, Bale, chose to produce? (Hint: How should Anvil think about how much Bale will produce when Anvil decides how much to produce?)

Reference no: EM131387953

Questions Cloud

Find the cournot equilibrium quantity per firm and point : Consider a duopoly facing an (inverse) market demand of p = 300 − 3Q. Firms produce a homogenous good at a constant marginal cost MC = 100. Find the best response (or reaction function) of each firm. Illustrate the two curves on a graph. Find the Cou..

Find the quantity and price in equilibrium : Suppose that the demand for a good is given by Qd = 1000 − 20p and that each unit can be produced at a cost of 8. Assuming this market is perfectly competitive, find the quantity and price in equilibrium.

What is the economically efficient output level : Suppose there are two types of consumers of a public good. There are 5 consumers with demand Q = 60 − p and 10 other consumers with demand Q = 100 − p. Assume that the marginal cost of the public good is equal to 200. What is the competitive market e..

Several units of homogeneous product as single package : A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 40 - 0.5P, and the marginal cost of production is $50. Determine the optimal number of units to put in a..

Same constant marginal cost of production : Suppose there are two identical firms producing Kale Pops, Anvil and Bale. They both have the same constant marginal cost of production of $2 and face the market demand curve Qd= 100-P. Each firm knows everything about each other. What will the other..

General definition of the term currency : Please provide a general definition of the term “currency.” What happens if the paper money or coin takes on value other than as a medium of exchange?

The optimal output to be sold to each type of consumer : Suppose there are 2 types of customers. Type A have the following demand P=200-2Q and type B have the following demand P=240 -8Q. The total cost is TC=4.9Q2. What prices should the monopoly charge each type of consumer and what should be the optimal ..

Attempting to assess the probability of a recession ending : A manager is attempting to assess the probability of a recession ending in the next six months and its impact on expected profitability. The manager believes there is a 33 percent chance the recession will end in six months and profits will return to..

Calculate number of drinks and price for optimal package : Suppose Chase opens a monopoly drink stand. He has two types of customers. Customers of type A have a demand function Qda= 5-P and customers of type B have a demand function of the form Qdb= 10-2P. Assume Chase has a constant marginal cost of 1 for p..

User Account

All Pages