Question 1 Clo4 8 Marks Assume A Market Context Where Two Companies Only Are Present Company I And Company 2 Compa 1 (22.08 KiB) Viewed 31 times
Question 1 Clo4 8 Marks Assume A Market Context Where Two Companies Only Are Present Company I And Company 2 Compa 2 (20.47 KiB) Viewed 31 times
Question 1 [CLO4, 8 Marks : Assume a market context where two companies only are present, company I and company 2. Company I has the following costs: Fixed cost for company 1-30 Variable cost for company 1-300¹ Company 2 has the following costs: Fixed cost for company 2-20 Variable cost for company 2-300 They both share the following demand: Q-50-4P Questions: TC], = 30 +30Q¹ TC2204300 Q = 56=4p 4P-56-Q P= 12.5-0.25 >= 12.5-0.24 1. Compute the optimal production for company 1 and 2. Assume there is no leader in the market [4 marks]: 2. Given the results you obtain at point 1, compute the profits for company 1 and 2 [2 marks]; 2
3-If one more company joins the market (assume with costs equal to company 1), and we still remain in a context where there is no market leader, what is the expected impact on optimal production and profits? Discuss [2 marks].
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!