1. Business
  2. Economics
  3. suppose a single firm produces all of the output in...

Question: suppose a single firm produces all of the output in...

Question details

Suppose a single firm produces all of the output in a contestable market. The market inverse demand function is P= 400-4Q, and the firms cost function is G Price: $ | 1 Profits: $ 10Q. Determine the firms equilibrium price and corresponding profits.You are the manager of a firm that competes against four other firms by bidding for government contracts. While you believe your product is better than the competition, the government purchasing agent views the products as identical and purchases from the firm offering the best price. Total government demand is Q= 1100-5P and all five firms produce at a constant marginal cost of $80. For security reasons, the government has imposed restrictions that permit a maximum of five firms to compete in this market, thus entry by new firms is prohibited. A member of Congress is concerned because no restrictions have been placed on the price that the government pays for this product. In response, she has proposed legislation that would award each existing firm 20 percent of a contract for 600 units at a contracted price of $100 per unit. If this legislation is passed, by how much should you expect your profits to change? Instruction: If you expect profits to fall, enter a negative (-) numberThe inverse demand for a homogeneous-product Stackelberg duopoly is P- 22,000-5Q. The cost structures for the leader and the follower, respectively, are C, (Q, 2,000 and CE(Q = 5,000Q . a. What is the followers reaction function? b. Determine the equilibrium output level for both the leader and the follower. Leader output: Follower output: c. Determine the equilibrium market price. d. Determine the profits of the leader and the follower Leader profits: $ Follower profits: $「 ]

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution