ECON106 San Jose State Managerial Economics Questions Response

User Generated

414041861_

Economics

ECON106

San Jose State University

Description

The demand function for an oligopolistic market is given

by the equation, Q = 180 - 4P, where Q is quantity demanded and

P is price. The industry has one dominant firm whose marginal cost

function is: MC = 12 + .1QD, and many small firms, with a total

supply function: QS = 20 + P.

(a) Derive the demand equation for the dominant oligopoly firm.

(b) Determine the dominant oligopoly firm’s profit-maximizing output

and price.

(c) Determine the total output of the small firms.

Unformatted Attachment Preview

San Jose State University Department of Economics Homework 4 ECON 106: Managerial Economics Prof. Hajikhameneh Spring 2018 1. (20 points). Kiwi Inc. dominates the wholesale chicken market in New Zealand. Its production cost is: long-run average cost (LAC) = long-run marginal cost (LMC) = $2 per pound and demand is given by P = 6 − 2Q, where P denotes price per pound and Q denotes output (in millions of pounds). (a) Determine Kiwi’s output and price (presuming it faces no other competitors). (b) Over the last five years, a Southeast Asian nation has dramatically increased its exports of chicken to New Zealand. That nation’s cost structure (with lower labor costs and higher shipping costs) is the same as Kiwi’s. Find the long-run output and price under perfect competition. (c) New Zealand lawmakers have decided to enact a $1 per pound tariff on all chicken imports. What is the new equilibrium price? Suppose that imports fall to Q I = .5 million pounds, what is Kiwi’s output? Compute consumer surplus and Kiwi’s profit. How has the tariff affected total welfare? 2. (15 points). The demand function for an oligopolistic market is given by the equation, Q = 180 − 4P, where Q is quantity demanded and P is price. The industry has one dominant firm whose marginal cost function is: MC = 12 + .1Q D , and many small firms, with a total supply function: QS = 20 + P. (a) Derive the demand equation for the dominant oligopoly firm. 1 (b) Determine the dominant oligopoly firm’s profit-maximizing output and price. (c) Determine the total output of the small firms. 3. (15 points). In a Cournot duopoly, both firms face the market demand: P = 100 − Q D , where P is price and Q D is total quantity demanded in the market. Firm 1’s cost function is given by C1 = .8Q21 and firm 2’s cost function is given by C2 = 6Q2 , where Q1 is firm 1’s output and Q2 is firm 2’s output. Derive firms’ optimal reaction functions and calculate equilibrium quantities and price. 4. (20 points). Nintendo and Sony Playstation are each planning to introduce one new game into the market. Each is considering three different kinds of games: an urban action game like Grand Theft Auto, an adventure game like Tomb Raiders, or a strategy game like Sim City. The table shows each firm’s profits (Sony’s profit first) in millions of dollars: Sony Grand Theft Tomb Raiders Sim City Grand Theft 2, 2 3, 10 4, 8 Nintendo Tomb Raiders 7, 3 −3, −3 2, 1 Sim City 8,4 1,2 -7,-7 (a) Assuming the firms act independently, find the equilibrium outcome. Briefly, explain your answer. Is this game an example of the prisoner’s dilemma? (b) Nintendo knows for a fact that Sony will not decide on its new project for four months. As CEO of Nintendo, what would you do immediately based on the analysis above? (c) ) If the firms were free to coordinate their decisions, what agreement (and actions) would they take? Explain briefly. 2
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

I always keep my word. Here is the assignment. Kindly review and leave an excelent rating.

Running head: MANAGERIAL ECONOMICS
Managerial Economics Assignment
Student Name
University Affiliation

1

MANAGERIAL ECONOMICS
Question 1 Kiwi Inc
A. Output and price for Kiwi
Kiwi maximizes profit by setting [MR] = [MC] since it’s a monopolistic firm.
Therefore,
= 6 – 4Q = 2, imply Q = 1 million pounds and P = $4 per pound.
B. Long run output and Price in Perfect Competition
Price [PC] = LAC = $2 per pound
Quantity [QC] = 2 million pounds.
C. Equilibrium Price and the effect of the tariff
The new price will be $2 + $1 = $3....


Anonymous
Really helped me to better understand my coursework. Super recommended.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags