Problem 3: Presently, Able High Lift and Baker Overhead are the only suppliers of services that...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Problem 3: Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy construction material to the heights required for high-rise construction projects the Northwest. No other suppliers have the equipment necessary to perform these lifts. The market inverse demand for these services is given below. P=800-8Q where P is price per lift and Q is total number of lifts per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC, =30 TVC, =50% In the work that follows, you may round all your results to 2 decimal places to reduce the clutter in your answers. a. Currently the market operates as a two-firm Cournot duopoly. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. b. Suppose that Able had entered this market first and had a first-mover advantage. In this case we would expect the Stackelberg outcome. Determine the market equilibrium price-output solutions for each firm including their respective profits. c. Summarize the results of your findings over the two possible outcomes. In your summary include price, quantity, and industry profits. Comment on your results. Problem 3: Presently, Able High Lift and Baker Overhead are the only suppliers of services that can lift heavy construction material to the heights required for high-rise construction projects the Northwest. No other suppliers have the equipment necessary to perform these lifts. The market inverse demand for these services is given below. P=800-8Q where P is price per lift and Q is total number of lifts per week. For simplicity, also assume that neither firm has fixed costs. From company records, you are given the following variable cost function for each firm: TVC, =30 TVC, =50% In the work that follows, you may round all your results to 2 decimal places to reduce the clutter in your answers. a. Currently the market operates as a two-firm Cournot duopoly. Calculate the Cournot market equilibrium price-output solutions for each firm including their respective profits. b. Suppose that Able had entered this market first and had a first-mover advantage. In this case we would expect the Stackelberg outcome. Determine the market equilibrium price-output solutions for each firm including their respective profits. c. Summarize the results of your findings over the two possible outcomes. In your summary include price, quantity, and industry profits. Comment on your results.
Expert Answer:
Answer rating: 100% (QA)
Cournot Duopoly a Inverse Demand P 800 8Q Marginal Revenue MR dPdQ 80 Total Cost Function Able High ... View the full answer
Related Book For
Data Analysis and Decision Making
ISBN: 978-0538476126
4th edition
Authors: Christian Albright, Wayne Winston, Christopher Zappe
Posted Date:
Students also viewed these economics questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
P Corporation acquired an 80% interest in S Corporation two years ago at an implied value equal to the book value of S. On January 2, 2017, S sold equipment with a five-year remaining life to P for a...
-
As a second-year financial analyst for Ai. Straub Investments, you are performing an initial analysis on Fizer Pharmaceuticals. A difficulty you've encountered in making comparisons with its chief...
-
Alliance Atlantis Communications Inc. changed its accounting policy to amortize broadcast rights over the contracted exhibition period, which is based on the estimated useful life of the program....
-
State the zeroth law of thermodynamics and first law of thermodynamics.
-
A shell-and-tube heat exchanger with one shell pass and two tube passes is used as a regenerator, to preheat milk before it is pasteurized. Cold milk enters the regenerator at T c,i = 5?C, while hot...
-
Can the corporate assets, such as the office and company cars, potentially be used inappropriately for personal benefit? The closely held business is located in Pennsylvania. The corporation also...
-
Match the following algorithm with its time complexity recurrence equation. Algorithms: Algorithm A: Binary Search Algorithm B: Merge Sort Algorithm C: Quick Sort Algorithm D: Tower of Hanoi...
-
You are required to provide a written report with evidence attached that proves you have identified and evaluated the food preferences of customer groups with differing characteristics so you can use...
-
Sun Sound Ear Bling Headphones Headphones Sales price $29.20 $45.60 Variable cost of goods sold (16.40) (25.50) Manufacturing margin $12.80 $20.10 Variable selling and administrative expenses (5.80)...
-
The directors of Precision Constructions Ltd (PC), a renowned construction company in Melbourne, have been negotiating with Elite Build Solutions Ltd (ES), a building company in New Zealand. The...
-
2. Write code for a SmartPhone class which is an InternetThing that includes: a. A constructor which accepts a manufacturer(string), a model(String), a serial number(String) and the number of...
-
Collins invested $87,000 cash in the business. Paid $27,000 in cash for equipment. Performed services for cash amounting to $8,700. Paid $3,500 in cash for advertising expense. Paid $2,700 in cash...
-
A byte-addressable main memory has address size of 24 bits. For a 2-way-set-associative -mapped cache design, the following bits of the address are used to access the cache. Tag (13 bits) (i) What is...
-
The May 2014 revenue and cost information for Houston Outfitters, Inc. follow: Sales Revenue (at standard).............. $ 540,000 Cost of Goods Sold (at standard) ..........341,000 Direct Materials...
-
For each of the four data sets in the file P10_64.xlsx, calculate the least squares line. For which of these data sets would you feel comfortable in using the least squares line to predict Y?
-
Many firms utilize sampling plans to control the quality of manufactured items ready for shipment. To illustrate the use of a sampling plan, suppose that a particular company produces and ships...
-
Explore the relationship between the selling prices (Y) and the appraised values (X) of the 148 homes in the file P02_11.xlsx by estimating a simple linear regression model. Interpret the standard...
-
Maximum work is done in compressing air when the compression is: (a) Isothermal compression (b) Adiabatic compression (c) Polytropic compression (d) None of these
-
A single stage single acting air compressor has intake pressure 1 bar and delivery pressure 10 bar. The compression and expansion follow the law \(\mathrm{pV}^{1.3}=\) constant. The piston speed and...
-
Derive the expression of work done by the compressor in isothermal compression, adiabatic compression, and polytropic compression.
Study smarter with the SolutionInn App