PROBLEM (5) (In a market with demand Q = 780 - p, there are 3 identical firms, A, B and C; each with a total cost functi
Posted: Thu May 05, 2022 6:17 am
PROBLEM (5) (In a market with demand Q = 780 - p, there are 3
identical firms, A, B and C; each with a total cost function TC(Q)
= 3(Q)^2. Calculating the market price under each of the 2
scenarios below, rank/order the Consumer Surplus in each scenario
(don’t calculate each CS; just rank them);
(i) B and C jointly form the fringe supply and A is the dominant
firm in the dominant firm model.
(ii) They act as perfectly competitive firms -as if trying to
maximize total surplus and minimize DWL- that is, their joint MC
serves as the “market supply” for the competitive market.
Please answer all the parts!
identical firms, A, B and C; each with a total cost function TC(Q)
= 3(Q)^2. Calculating the market price under each of the 2
scenarios below, rank/order the Consumer Surplus in each scenario
(don’t calculate each CS; just rank them);
(i) B and C jointly form the fringe supply and A is the dominant
firm in the dominant firm model.
(ii) They act as perfectly competitive firms -as if trying to
maximize total surplus and minimize DWL- that is, their joint MC
serves as the “market supply” for the competitive market.
Please answer all the parts!