Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

5. Tom is a monopolist input supplier to Dick and Harry. Tom's marginal cost is 1. Dick and Harry are duopolists with production function q

image text in transcribed
5. Tom is a monopolist input supplier to Dick and Harry. Tom's marginal cost is 1. Dick and Harry are duopolists with production function q = x1/2. No firm has fixed costs. The demand for the final product is given by Q = 100 - p. a) Assume Dick and Harry buy the input from Tom at price k. What are their cost functions? b) Find the Cournot equilibrium quantities. c) What price, k, should Tom set? d) Now suppose Dick could buy Tom's firm and stop supplies of the input to Harry so that Dick would be a monopolist. How much is Dick willing to pay for Tom's firm? e) How much is Tom willing to sell his firm for

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

Climate Policy And Nonrenewable Resources The Green Paradox And Beyond

Authors: Karen Vollebergh, Rick Van Der Ploeg

1st Edition

0262319845, 9780262319843

More Books

Students also viewed these Economics questions

Question

Name the three well known forms of presentation of data:

Answered: 1 week ago

Question

Examine various types of executive compensation plans.

Answered: 1 week ago

Question

1. What is the meaning and definition of banks ?

Answered: 1 week ago

Question

2. What is the meaning and definition of Banking?

Answered: 1 week ago

Question

3.What are the Importance / Role of Bank in Business?

Answered: 1 week ago

Question

Be straight in the back without blowing out the chest

Answered: 1 week ago

Question

Wear as little as possible

Answered: 1 week ago

Question

Be relaxed at the hips

Answered: 1 week ago