Suppose that firms in the US auto industry are symmetric and compete based on monopolistic competition. The US economy demands in total 16 million cars, with each firm facing the following demand function q = 16, 000, 000 . - 3 00 (P – P) where 16,000,000 denotes total demand for autos by US consumers, n is the total number of firms competing in the auto industry and p is the average price charged by these fırms. Each fırm also operates based the following total cost function TC = 640, 000, 000 + 15, 000q Answer the following questions: 1. The number of firms, n, is equal to 2. The price, p , charged by each firm is equal to 3. Suppose the US opens up to trade with an economy that is 3-times larger (i.e., purchases 48 million autos). 1. the number of firms after opening up to trade is 2. the price charged by each firm after opening up to trade is 3. Do US consumers gain from trade?
Suppose that firms in the US auto industry are symmetric and compete based on monopolistic competition. The US economy demands in total 16 million cars, with each firm facing the following demand function q = 16, 000, 000 . - 3 00 (P – P) where 16,000,000 denotes total demand for autos by US consumers, n is the total number of firms competing in the auto industry and p is the average price charged by these fırms. Each fırm also operates based the following total cost function TC = 640, 000, 000 + 15, 000q Answer the following questions: 1. The number of firms, n, is equal to 2. The price, p , charged by each firm is equal to 3. Suppose the US opens up to trade with an economy that is 3-times larger (i.e., purchases 48 million autos). 1. the number of firms after opening up to trade is 2. the price charged by each firm after opening up to trade is 3. Do US consumers gain from trade?
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
Chapter12: Price And Output Determination: Oligopoly
Section: Chapter Questions
Problem 1E
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