3. The East Company and the West Company are the only two firms that produce and...

 

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3. The East Company and the West Company are the only two firms that produce and sell a specialized type of machinery. The market demand curve for the machinery is as follows: P = 25 -0.0005 Q In this equation, P is the price of the machinery in dollars and Q is the total amount demanded. The total cost function for the East Company is as follows: TCEast = 4 Q+ 0.001 Q?East In this equation, TCEast is total cost in dollars and QEast is the output. The total cost function for the West Company is as follows: TCWest = 10 Q+ 0.001 Q?west In this equation, TCwest is total cost in dollars and Qwest is the output. a. If these two firms are successful in forming a cartel, determine (i) the profit-maximizing outputs for the East and West Companies, (ii) the profit-maximizing prices for the East and West companies, and (ii) the total profits for the East and West Companies. 3. The East Company and the West Company are the only two firms that produce and sell a specialized type of machinery. The market demand curve for the machinery is as follows: P = 25 -0.0005 Q In this equation, P is the price of the machinery in dollars and Q is the total amount demanded. The total cost function for the East Company is as follows: TCEast = 4 Q+ 0.001 Q?East In this equation, TCEast is total cost in dollars and QEast is the output. The total cost function for the West Company is as follows: TCWest = 10 Q+ 0.001 Q?west In this equation, TCwest is total cost in dollars and Qwest is the output. a. If these two firms are successful in forming a cartel, determine (i) the profit-maximizing outputs for the East and West Companies, (ii) the profit-maximizing prices for the East and West companies, and (ii) the total profits for the East and West Companies.

Answer rating: 100% (QA)

Answer Demand Function P2500005Q Q500002000P Where QQeQw TC for east company TCe 4Q0001Qe2 TC f... View the full answer