Question
I'm struggling on this problem I have been given. Can I get some help, at a minimum, on how to begin tackling this please? Thank
I'm struggling on this problem I have been given. Can I get some help, at a minimum, on how to begin tackling this please? Thank you...
Suppose the demand for a market is Qd = 200 ? 2P. The competitive fringe supply function is Qs = .5P ?12.5. The dominant rm's marginal cost function is MC = 10 + .5Q. Use the dominant firm model to answer the following questions:
a. What is the minimum price needed for the competitive fringe to supply positive units of output?
b. At what price does the competitive fringe supply output to the entire market?
c. Derive the dominant firm's residual demand function.
d. Derive the dominant firms marginal revenue function.
e. What is the equilibrium price set by the dominant firmrm?
f. The competitive fringe reduces the market power of the dominant rm. If the dominant rm wanted to try and eliminate the competitive fringe, how might the dominant accomplish this?
g. If the dominant firm eliminates the competitive fringe, explain how it will effect the model.
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