Reference no: EM13183589
Three oligopolists, A, B, and C, produce an identical product, Q. Q is produced under conditions of constant costs, that is, AC = MC = $100. The market demand schedule for Q is:
Price Quantity Demanded
$1000 0
950 25
900 50
850 75
800 100
750 125
700 150
650 175
600 200
550 225
500 250
450 275
400 300
a) A,B, and C decide to act illegally as a cartel, to divide the market equally among the three of them, and to set the price and output that will maximize their total profits. What price and output do they set? What is the output level that each of the firms agrees to? What profit is earned by each firm and by the three firms together?
b) A is impressed with honesty of B and C, and believes they will keep to their agreements. They do, and A cheats by increasing output by 25 units. What is the new market price? How have the profit levels of A, B, and C changed? How have total profits in the industry changed?
c) What actions are B and C likely to take in retaliation? Show how these actions will affect the market price, and the profit levels of the three firms.
d) What can you learn from this problem about the likely stability of a cartel?
|
Discuss the short-run and long-run costs and benefits
: The Fed's decided to maintain its low interest-rate target in the face of a rightward shift of theAD curve in the late 1960s which led to an inflationary equilibrium. Discuss the short-run and long-run costs and benefits of the Fed's other two op..
|
|
Compute the companys predetermined overhead rate
: Compute the company's predetermined overhead rate for the year and record the above transactions in journal entries.
|
|
Does this firm exhibit economies or diseconomies of scale
: Which input bundle represents efficient production of 100 units of output if the rental paid to capital is $25 and the wage paid to labor is $50? Round any decimals to the nearest hundredth. Derive the firm's cost function using the rental and wa..
|
|
What rate of nominal wage growth will workers seek
: Assume that workers, employers and investors all believed that inflation in the coming year would equal the annualized rate of inflation experienced in the past 6 months. Also assume that workers had been receiving nominal wage gains of 5% during ..
|
|
What is the output level that each of the firms agrees to
: A,B, and C decide to act illegally as a cartel, to divide the market equally among the three of them, and to set the price and output that will maximize their total profits. What price and output do they set? What is the output level that each of ..
|
|
What will happen because it is out of quilibrium
: Calculate total revenue, marginal revenue, marginal cost, and average cost at each level of sales fo the store. If Swim N Style is a profit maximizer, what number of suits will it sell per hour? What will its price and profit be? How can you tell wha..
|
|
Prepare an answer sheet with column headings
: All of the costs you have listed above, except one, would be differential costs between the alternatives of Staci producing pottery or staying with the aerospace company. Which cost is not differential? Explain.
|
|
State the final solid product sodium oxide
: Sodium bicarbonate decomposes to form the final solid product sodium oxide. Using a balanced equation, you are to convert the grams of sodium bicarbonate, one number is 5.213, to moles.
|
|
State the bracket series of emission lines falls
: The Bracket series of emission lines falls in the infrared region of the em spectrum, and each line is a result of an electron falling from a higher Bohr orbit to the n=4 level.
|