Suppose that there are only two firms firm a and firm b in, Ask an Expert

Economics

Suppose that there are only two firms (Firm A and Firm B) in the market for decorative lampshades. Let the inverse demand function and the total cost function be given by: P = 50 –Q and TC = 2Q Assume that Firm A and Firm B initially agree to collude with each other and coordinate price and output decisions. Each firm will produce half of the industry output.

(a) How many lampshades would be produced by the entire industry? What price would be charged for each lampshade?

(b) Using your answer from Part (a) calculate the profit earned by each firm in the industry.

(c) Suppose that Firm B assumes that Firm A will honor its agreement. Firm B decides to cheat and produce 2 more units than what Firm A will produce. Calculate the profits for both Firm A and Firm B.

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M92188389

Have any Question?Write your Review or question?

Related Questions in Business Economics

Graph needs to be includedmost graduate schools of business

Graph needs to be included. Most graduate schools of business require applicants for admission to take the GMAT, the Graduate Management Admission Test. Scores on the GMAT are roughly normally distribute with a mean of 5 ...

Garber and skinner suggest that the large per capital

Garber and Skinner suggest that the large per capital health spending in the US (and relatively low returns to health) are due to productive and allocative inefficiencies. Which inefficiency (if either) do you think char ...

My kids love playing uno and we just finished up an intense

My kids love playing UNO and we just finished up an intense round. Lets say that the deck has 80 cards. 20 red, 20 blue, 20 green and 20 yellow. What is the probability of pulling 3 green cards if the first 2 are replace ...

How can local the local government help prepare employees

How can local the local government help prepare employees for higher level positions in the organization.

What are the implications of outsourcing key public

What are the implications of outsourcing key public responsibilities to global corporations for the Australian state and society?

1 a county health department is trying to decide whether to

1) A county health department is trying to decide whether to offer free flu vaccines to its residents next year. The vaccine protects against the flu strains expected to be most prevalent next year, but does not fully pr ...

A bar wants to move into a new area they want to find out

A bar wants to move into a new area. They want to find out the average income of people in the area to set a price point. To estimate the income of the locals with an error of at most $5,000 at a 80% confidence level, wh ...

From a deontological ethical framework construct an

From a deontological ethical framework, construct an argument either in favour of a minimum wage or against it.

What is the relationship among high school rank act scores

What is the relationship among high school rank, ACT scores, time spent studying, a positive attitude toward school, and a successful collegiate experiences?

In 2009 the hershey company of pennsylvania became the

In 2009, the hershey company of pennsylvania became the latest company to open a candy factory in mexico, joining other american candy companies including brach's confections and ferrara pan candy, which had opened plans ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert