PROBLEM I. Suppose that, in a market of a certain product, there is a single dominant firm with a cost function C(Q) = cQ, where c > 0 is a constant, and the competitive fringe with a supply function Qf (p) = p150. The market demand function is given by QM(p) = 420 2p.

Q1. When c = 130, the dominant firm's profit-maximizing quantity is

(a) 72.

(b) 90.

(c) 84.

(d) 110.

(e) 105.

Q2. When c = 130, the equilibrium market price of the product is

(a) 120.

(b) 135.

(c) 150.

(d) 130.

(e) 160.

Q3. When c = 130, what is the market share of the dominant firm? (Choose the closest.) (a) 82%

(b) 98%

(c) 86%

(d) 90%

(e) 75%

Q4. Under what condition of c does the competitive fringe produce nothing at the equilibrium?

(a) c 110.

(b) c 110.

(c) c 130.

(d) c 125.

(e) c 90.