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Consider a market demand curve that can be expressed as P = 4,500 - 20Q. There is one dominant firm, BostonSci Co., in the market characterized by a total cost function C = 300Q.dominant so MC = AC = 300. For simplicity, assume there are no fixed costs.

a. Suppose that the market is served by this dominant firm along with a large number of fringe firms that together always produce a total output of Q.fringe = 10. Find the residual demand curve for the dominant firm.

b. Find the quantity that the dominant firm will produce.

c. Find the market price and the market quantity for this dominant-firm market.

d. Suppose that the dominant firm was to merge with all of its fringe firms into a monopoly structure but with lower costs of C = 200Q for the merged firm.

i. How much would the monopolist produce, and at what price?

ii. How much profit would the monopolist earn as compared to the dominant firm?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91388001

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