Two ready-to-eat breakfast cereal manufacturers, Lots of Sugar and Buckets of Goo, face combined demand for their products given by Q = 75 – P. Their total costs are given by TCLots of Sugar = 0.1QLots of Sugar2 and TCBuckets of Goo = 5QBuckets of Goo. If they successfully collude, their total profits will be
a) $1,287.50. (Answer)
Glyde Air Fresheners is the dominant firm in the solid room aromatizer industry which has a total market demand given by Q = 80 – 2P. Glyde has competition from a fringe of four small firms that produce where their individual marginal costs equal the market price. The fringe firms each have total costs given by TCi = 10Qi + 2Qi2. If Glyde’s total costs are given by TCG = 100 + 6QG, what price should Glyde establish for air fresheners?
e) $18 (Answer)
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