1. Identify whether each of the following transactions involves spot exchange, contract, or
a. Barnacle, Inc., has a legal obligation to purchase 2 tons of structural steel per week to
manufacture conveyor frames.
1. The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 3(Q1 +
Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2.
a. Determine the reaction function for each firm.
Firm 1: Q1 = - Q2
Firm 2: Q2 = - Q1
b. Calculate each firms equili
A firm has $1.5 million in sales, a Lerner index of 0.57, and a marginal cost of $50, and
competes against 800 other firms in its relevant market.
Instructions: Round your answers to 2 decimal places.
a. What price does this firm charge its customers?
1. The graph below illustrates two demand curves for a firm operating in a differentiated product
oligopoly. Initially, the firm charges a price of $60 and produces 10 units of output. One of the
demand curves is relevant when rivals match the firms price
1. A firm sells its product in a perfectly competitive market where other firms charge a price of
$90 per unit. The firms total costs are C(Q) = 50 + 10Q + 2Q2.
a. How much output should the firm produce in the short run?
b. What price should the fi
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1. A monopolists inverse demand function is P = 150 3Q. The company produces output at
two facilities; the marginal cost of producing at facility 1 is MC1(Q1) = 6Q1, and the marginal
cost of producing at facility 2 is MC2(Q2) = 2Q2.
a. Provide the equatio
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