Firm A acts in a competitive market and has profits A = 120 A - 3x...

 

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Firm A acts in a competitive market and has profits A = 120 A - 3x Each unit of r that is produced has a negative impact on Firm B because of contamination issues: Firm B's profits are TB = -x (a) (10 points) What is the market level of A? Hint: you can go to Wolfram Alpha, write the problem you are trying to solve (max TA, of course instead of TA you write the function, you can just write r instead of A), and press "" (b) (10 points) What are the profits for Firms A and B for that level? (we are only focusing on Firm B as it is affected by the externality so their profits will be negative). (c) (10 points) What would be the efficient level of XA (in this exercise we only focus on those two firms, no one else matters)? Hint: you have to consider the situation of both firms when writing the objective function in Wolfram Alpha. (d) (10 points) What would the profits for Firms A and B be for the efficient level of production? Firm A acts in a competitive market and has profits A = 120 A - 3x Each unit of r that is produced has a negative impact on Firm B because of contamination issues: Firm B's profits are TB = -x (a) (10 points) What is the market level of A? Hint: you can go to Wolfram Alpha, write the problem you are trying to solve (max TA, of course instead of TA you write the function, you can just write r instead of A), and press "" (b) (10 points) What are the profits for Firms A and B for that level? (we are only focusing on Firm B as it is affected by the externality so their profits will be negative). (c) (10 points) What would be the efficient level of XA (in this exercise we only focus on those two firms, no one else matters)? Hint: you have to consider the situation of both firms when writing the objective function in Wolfram Alpha. (d) (10 points) What would the profits for Firms A and B be for the efficient level of production?

Answer rating: 100% (QA)

a To find the market level of 2A we need to maximize the profits of Firm A The profits of Firm A can ... View the full answer