What firms survive the new demand curve in the industry

Assignment Help Business Economics

Reference no: EM13149102

Consider an industry of four firms with the following market shares: 50%, 30%, 10% and 10%. The product is homogeneous, such that the price in the market is $30. However, the industry just experienced a sudden drop in demand. The new (inverse) demand curve is estimated to be P = 50 – (0.2)Q, where Q is the total quantity supplied and sold in the market. Assume that each firm chooses their quantity (qi) to maximize profit according to the rule MR = MCi, where each of the four firms has their own (constant) MCi = ACi over all q. a. What is the share-wise Lerner Index for this industry? b. What will the new Lerner Index be after some time with the new demand curve and market price of 30? What firms survive the new demand curve in the industry and why?

Reference no: EM13149102

Questions Cloud

What was the unknown substance added : The [H+] of a solution is 1.0 x 10-5 M. After the addition of an unknown substance, the [OH-] was 1.0 x 10-3M. What was the unknown substance added?

Recovery faster in order to get out of great recession : Many critics however contend that the American Recovery and Reinvestment Act of 2009 were not effective at all except too much budget deficit

Find confidence interval for proportion of letters mailed : Based on this, compute a 99% confidence interval for the proportion of all letters mailed in the United States that were delivered the day after they were mailed.

What would happen in this market : What would happen in this market? If consumers’ expectations were such that they were concerned about the economy and jobs, what would you think would happen in this market?

What firms survive the new demand curve in the industry : What will the new Lerner Index be after some time with the new demand curve and market price of 30? What firms survive the new demand curve in the industry and why?

Any substance that accepts protons is called : When KBr is placed in an aqueous solution, which of the following becomes oxidized?

Statement of cash flows direct method in the amount : On December 31, 2011, Wellstone Company reported net income of $70,000 and sales of $210,000. The company also reported beginning and ending accounts receivable at $20,000 and $25,000, respectively. Wellstone will report cash collected from custom..

Differences in caffeine levels : Johnny has allocated $30 toward coffee and tea and feels that coffee and tea are perfect substitutes. Due to differences in caffeine levels, his MRS of tea for coffee equals 2.

How much physiological saline can be prepared : How much 0.54 M NaCl, "physiological saline," can be prepared via the dilution of 250 mL of a 6.0 M NaCl solution?

User Account

All Pages