A large firm that is a price leader in an industry characterized also by many small...

 

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A large firm that is a price leader in an industry characterized also by many small competing firms estimates that the market demand for its product is as follows: Qm = 40,700 - 100 P where Q is units per month. It expects small firms in the industry to supply output according to the following function: Qs = 700 - 25 P The large firm's total cost function is: TCL=500,000 + 100QL + 0.008 QL which implies that the large firm's marginal cost function is: MCL=100+ 0.016QL a. What quantity will the large firm sell? b. What price will the large firm set? c. What quantity will the small firms sell? d. What quantity will the industry sell? Does this check with parts b. and c.? A large firm that is a price leader in an industry characterized also by many small competing firms estimates that the market demand for its product is as follows: Qm = 40,700 - 100 P where Q is units per month. It expects small firms in the industry to supply output according to the following function: Qs = 700 - 25 P The large firm's total cost function is: TCL=500,000 + 100QL + 0.008 QL which implies that the large firm's marginal cost function is: MCL=100+ 0.016QL a. What quantity will the large firm sell? b. What price will the large firm set? c. What quantity will the small firms sell? d. What quantity will the industry sell? Does this check with parts b. and c.?

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a To find the quantity the large firm will sell we can set the market demand eq... View the full answer