Question
1.) Rayz, Inc., competes against many other firms in a highly competitive industry. Over the last decade, several firms have entered this industry and, as
1.) Rayz, Inc., competes against many other firms in a highly competitive industry. Over the last decade, several firms have entered this industry and, as a consequence, Rayz is earning a return on investment that roughly equals the interest rate. Furthermore, the four-firm concentration ratio and the Herfindahl-Hirschman index are both quite small, but the Rothschild index is significantly greater than zero. Based on this information, which market structure best characterizes the industry in which Rayz competes? Explain
2.) You are the manager of a monopoly, and your demand and cost functions are given by P = 200 2Q and C(Q) = 1,400 + 2Q2, respectively.
a. What price-quantity combination maximizes your firm's profits?
b. Calculate the maximum profits.
c. Is demand elastic, inelastic, or unit elastic at the profit-maximizing price-quantity
combination?
3.) Determine the profit-maximizing output and price, and discuss its implications, if:
1.You are a monopolistically competitive firm and the inverse demand is P = 100 - Q and your cost is C(Q) = 125 + 4Q2
2.You are a monopoly and the inverse demand is P = 200 - Q and your cost is C(Q) = 150 + 4Q2
4.) Suppose the inverse demand function for two Cournot duopolists is given by P = 10 - (Q1 + Q2) and their costs are zero.
A.What is each firm's marginal revenue and reaction functions?
B.Determine the Cournot equilibrium outputs and equilibrium price.What is the implication of this model?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started