7. :Monopoly with a competitive fringe Precious Metals Inc. (PMI) is a near-monopoly supplier of iridium. There is also a competitive fringe of iridium producers. Market demand for iridium is represented by the following function: pP(Q) = 400 – 2Q The fringe producers face marginal extraction costs of MCr(qr) = 30 + 0.5qr while PMI has marginal costs of $20/kg. If the competitive fringe is not participating in the market, the marginal revenue of PMI is MR(Q) = 400 – 4Q If the competitive fringe is participating in the market, the marginal revenue of PMI is MR(Q) = 100 –-Q Note: Prices are measured in dollars/kilogram (S/kg) and quantity is measured in kilograms (kg)
7. :Monopoly with a competitive fringe Precious Metals Inc. (PMI) is a near-monopoly supplier of iridium. There is also a competitive fringe of iridium producers. Market demand for iridium is represented by the following function: pP(Q) = 400 – 2Q The fringe producers face marginal extraction costs of MCr(qr) = 30 + 0.5qr while PMI has marginal costs of $20/kg. If the competitive fringe is not participating in the market, the marginal revenue of PMI is MR(Q) = 400 – 4Q If the competitive fringe is participating in the market, the marginal revenue of PMI is MR(Q) = 100 –-Q Note: Prices are measured in dollars/kilogram (S/kg) and quantity is measured in kilograms (kg)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter16: Government Regulation
Section: Chapter Questions
Problem 6E
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