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If a duopolist has a linear demand curve of the form Q=400-P, assuming each firm has total cost of TC= 3000+100Q. Calculate the profit maximizing price-quantity combinations using the following four oligopoly pricing models listed below demonstrating that:
a) Under the Cournot model, both firms will earn the same level of profit and determine industry profit and explain why this would be the case.
b) Under the cartel model, each firm earns a higher profit than Cournot
c) under the Quasi-competitive model,the firm will make a loss equivalent to fixed costs.
d) Under the Stackelberg's model,the leader will earn more than twice the profit of the follower and that total industry profits will be lower than both Cournot and Cartel models. Explain why this would be the case.
Show diagrammatically the impact on the firm's profit if in the short run demand or the product reduces
Suppose a sample society has a economy with one resource labour. Labour can be used to produce only 2 commodities X a necessity good (food) and Y a luxury good (music & merriment). Suppose the labour force consists of 100 workers.. 1 labourer can produce either 5 units of necessity per month by (hunting and gathering)
A price change causes the quantity demanded of a good to decrease by 25 percent, while the total revenue of that g 10 percent. Is the demand curve elastic or inelastic?
Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a success.
a. A monopolist producing and selling cooking gas faces a demand curve,
Q = 100 – 0.2P. If Total Cost is TC=4000+ 50Q.
i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit.
ii. Explain how her profits she will affected if regulators forced her to operate like a perfectly competitive firm.
iii. Illustrate and compute dead-weight loss and lost consumer surplus associated with her Monopoly operations.
a. Suppose the joint cost function of a firm producing two products X and Y IS given by C = 250X2 + 120Y2. Assuming that output of the two products is restricted at 1369.
i. Using Lagrangian multiplier technique find the amounts of X and Y that will minimize cost and compute this cost.
ii. Examine the cost implications of changing this optimal combination so as to produce 236 additional units of X and 236 fewer units of Y.
Kibur Plc uses a job order cost system. Overhead is applied at the rate of Br 30 per direct labor
hour. Job #251 includes a prime cost of Br 20,000 and a conversion cost of Br 25,000. For this
job, 500 direct labor hours were used. Compute the total cost of Job 251.
AB Co. applies overhead to jobs using a predetermined rate of $1.25 per direct labor hour. For
2008, actual overhead was $25,750; overhead was over applied by $1,500. What estimate of actual
activity in direct labor hours did AB Co. assume when establishing its overhead rate for 2003.
AB.Co applies overhead to jobs a predetermined rate of $1.25 per direct labor hour. For 2008, actual overhead was $25,750; overhead was over applied by $1500. What estimate of actual activity in direct labor hours did AB Co. Assume when establishing its overhead rate for 2003.
AB.Co applies overhead to jobs a predetermined rate of $1.25 per direct labor hour. For 2008, actual overhead was $25,750; overhead was over applied by $1500. What estimate of actual activity in direct labor hours did AB Co. Assume when establishing its overhead rate for 2003.
