Bridgestone and G optimal production value will reaction function is given by Qs

Question

Bridgestone and G optimal production value will reaction function is given by Qs oodyear must each decide how many tires to produce; however, their depend on what their competitor produces. Bridgestone's -19,000-4Qc and Goodyear's reaction function is given by Qc -16,000-4Q, What is Bridgestone's equilibrium quantity a) 4000 b) 200 c) 3000 d) 5000 1. MRTS stands for a) Marginal Rate of Technical Substantiation b) Marginal Rate of Transformative Substitution Maximum Rate of Technical Substitution d)> Marginal Rate of Technical Substitution 22. If the interest rate is 7%, the Present Value of having $770 seven years from now is a) $513.08 b) $719.63 c) $479.52 d) $1236.45 23. If a Good is both Non-Excludable and Non-Rivalrous then it is... a) A Private Good b) Common Property c) A Quasi-Public Good d) A Pure Public Good útive Firm has a Cost Function C-4900+4q where MC -8q. If the ce is $272, what is the Perfectly Competitive Firm's profnt? a) $o b) $-276 c) $9800 d) $4900

Explanation / Answer

20) Qb = 19000 - 4Qg

Qg = 16000 - 4Qb

Replacing Qg in first equation:

Qb = 19000 - 64000 +16Qb

Qb = 3000 (option c is correct)

21) Option d is correct

22) PV = FV/(1 + r)7

PV = 770/1.077 = $479.52 (option c is correct)

23) Option d is correct (by definition)

24) MC = dC/dq = 8q

Profit is maximized where P = MR = MC:

272 = 8q

q = 34

Profit = 34 x 272 - 4900 - 4 x 342 = - $276 (Option b is correct)

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