Full points to whoever can help me answer these question and give the correct an
ID: 1100620 • Letter: F
Question
Full points to whoever can help me answer these question and give the correct answer thanks. for the graph can you also tell me where is the monopoly outcome?
Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and is $0.20 per can. Assume that neither firm had any startup costs. That is, marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. Place the black point (X symbol) on the graph that follows to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together. Drop lines will extend to both axes automatically. Oligopolists often behave uncooperatively and act in their own self-interest, even though this decreases total economic profit in the market. Again, assume the two companies form a cartel and decide to work together. Both firms agree to produce the same quantity. Consider the profit-maximizing level of output for each firm. Now, suppose that Mays decides to break the collusion and increase its output by 50% of Mays's profit-maximizing output, whereas McCovey continues to produce the same amount as in the collusive agreement.Explanation / Answer
a)
1. 320,000/2 = 160,000 (MR and MC intersects at quantity = 320)
2. $.6 (Price at qty = 160,000 = .6)
3. $64,000 (160000 * $0.4)
4. $128,000
b)
1. decrease
2. $.5 ( see demand price curve for quantity = 320 +.5*160 = 400)
3. $72,000 ( Formula used: 240000* (.5 - .2) = 240000*.3 =$72,000 )
4. $48,000 (Formula used = 160000 *.3 = $48,000)
5. decrease (total profit = 72000+ 48000 = 120,000)
Place point X on demand curve (blue line where price = .6. This point is same if you draw vertical line from point where MR = MC)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.