Determine the price charged by the profit maximizing cartel, Microeconomics

Assignment Help:

In an industry with two firms, represent the outputs for these single product firms as q1 and q2 . The two firms decide to form a cartel and set their levels of output to maximise total profits for the industry. Consider the situation where the industry inverse demand function curve which the two firms face is:

P = 25-2q

where  q  is the total output or sales of the two firms. Next, suppose that these firms have different cost structures. In particular, the total cost functions for firm 1 and firm 2, respectively, are

C1=q1

C2 = 0.25q22

Determine the price charged by the profit-maximizing cartel, the amount of industry profit earned, and the output and profit share for each firm. Ensure you have found a maximum by deriving the second-order sufficient conditions.


Related Discussions:- Determine the price charged by the profit maximizing cartel

Econometric equation, This research will follow the methodology of economet...

This research will follow the methodology of econometrics; Chao, 2005; Castle & Shephard, 2009): 1. Specification of the model using a specific stochastic equation, together wit

Molarity, i have 40cm3 of hcl of 1 molarity i want to dilute it to 0.2m can...

i have 40cm3 of hcl of 1 molarity i want to dilute it to 0.2m can yo please help

Unemployment, Unemployment: Individuals who want to be employed, and are ac...

Unemployment: Individuals who want to be employed, and are actively seeking work, but can't find a job, are considered ‘officially' unemployed. Individuals who aren't working, but

Applications, hey, I just have a question on how to apply things like ATC a...

hey, I just have a question on how to apply things like ATC and AVC in a problem. im just not too sure about what happens to the quantity of a particular good when asked. this is p

Cost minimizing input choice, The Cost Minimizing Input Choice - Assump...

The Cost Minimizing Input Choice - Assumptions Two Inputs: Labor (L) & capital (K) Price of labor: wage rate (w) The capital price - R = depreciation ra

Indirect utility functions, Indirect Utility Functions: Let qi denotes...

Indirect Utility Functions: Let qi denotes commodity i and pi is the price of that commodity. Let y denotes money income of the consumer. Suppose vi = pi/y. The budget constra

Write short note on monopoly model, In the purely competitive analysis, the...

In the purely competitive analysis, there were two dissimilar models, one model for the industry, in which the interaction of supply and demand recognized the market price and quan

Demand and supply, Dance fans switches away from Dance music to R&B music A...

Dance fans switches away from Dance music to R&B music AND the price of MP3 players increases

Externality, When somebody wearing muddy shoes rides a public bus, he impos...

When somebody wearing muddy shoes rides a public bus, he imposes a negative externality on other riders (passengers get some mud rubbed off on them, and the shoes look ugly). If a

Movements in demand, diagram of extension and contraction in demand?

diagram of extension and contraction in demand?

Write Your Message!

Captcha
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