Microeconomics Final Assignment: Two Firms In A Market (Math Problem Sample)
This is my final, please do it carefully and correct. i will appreciate it, just do No. 5 6 7 8 questions. Only 4 Questions required. thank you so much.source..
MICROECONOMICS FINAL: Questions 5, 6, 7, 8
5. Suppose there are two firms in a market with demand D(p) = 100-P.
Assume that there are two possible firms who can serve this market.
One has a total cost function of C1(y) = 100 + y. The other firm has a cost function of C2(y) = 12y. Suppose that Firm 1 serves this industry as a monopoly. What will be the outcome (price and quantity)?Suppose the same for Firm 2? Which maximizes total surplus?
Assuming D (p) = Q then Q=100-P
Then the D (p) = 100-P
Then P= 100-Q
TR= (100-Q)*Q= 100Q-Q2
C1(y) = 100 + y, which is TC=100+q and MC=1
The other firm has a cost function of C2(y) = 12y, which is TC=12q and MC= 12
At profit maximizing quantity MR=MC
Firm 1 then100-2Q=1 and q= 49.5 and p= 100-49.5= $ 50.5 firm 2 then 100-2Q=12 and q=44 and p= $ 56
(a) Now assume that the right to be a monopolist will be “auctioned by price?
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