Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1.Consider a homogenous good industry with four firms. Total demand is given by D(p)=200-p. The variable (=marginal) cost of each of the firms is c1=10,

1.Consider a homogenous good industry with four firms. Total demand is given by D(p)=200-p. The variable (=marginal) cost of each of the firms is c1=10, c2=20, c3=30 and c4=35. Firms compete in prices.Suppose firms 1 and 2 merge into one entity and produce with a marginal cost of 20. Which of the following statements is correct?

After the merger, the price in the industry increases by $20.

After the merger, the price in the industry decreases by $10.

After the merger, the price in the industry increases by $10.

After the merger, the price in the industry decreases by $20.

2.Consider an industry in which the production technology yields the cost function C(Q)=1800+(3Q)2.

Which of the following statements is correct?

If Q<10, the cost function is sub-additive.

If Q<20, the cost function is sub-additive.

If Q<20, the cost function is sub-additive.

The cost function is sub-additive for all Q>0.

None of the above.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Moral Controversies In American Politics

Authors: Raymond Tatalovich, Warren Tatalovich

4th Edition

1317464427, 9781317464426

More Books

Students also viewed these Economics questions

Question

Verify Equation (9.36).

Answered: 1 week ago

Question

Speak clearly and distinctly with moderate energy

Answered: 1 week ago

Question

Get married, do not wait for me

Answered: 1 week ago

Question

Do not pay him, wait until I come

Answered: 1 week ago