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

Price mechanism, use of diagram how the price mechanism operates to allocat...

use of diagram how the price mechanism operates to allocate scarce resources. use examples to illustrate the answer.

Molecular energies, Molecular Energies,  Translational, rational and vibrat...

Molecular Energies,  Translational, rational and vibration components of the energy of the molecules of a gas can be recognized. A molecule is a collection of atoms held in a pa

Various intermediate quantities, An economy can produce a maximum of either...

An economy can produce a maximum of either 28 million tons of wheat or 7,000 automobiles, or various intermediate quantities, as depicted in the table below:

Externalities, Assignment: Externalities •Consider the following scenario: ...

Assignment: Externalities •Consider the following scenario: The city council has just approved the construction of a water park in your town. As city economist, you are responsible

ECO 365, calculate demand function is Q=100-P, where Q is quantity demand a...

calculate demand function is Q=100-P, where Q is quantity demand and P is price

Linkages of bureaucracy with the knowledge centres, LINKAGES OF BUREAUCRACY...

LINKAGES OF BUREAUCRACY WITH THE KNOWLEDGE CENTRES: The Government employees must make use of knowledge generated in higher seats of learning for implementing economic policie

Macroeconomics, Real and nominal GDP, GNP, and Intrest rates, Stock & flow...

Real and nominal GDP, GNP, and Intrest rates, Stock & flow variables, Disinflation, Inflation rates, unemployement rates, labor force, participation rate, output per person, GDP d

#title.micro, what are jobs of the department of justice and the federal tr...

what are jobs of the department of justice and the federal trade commission in business pratices.

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