The following matrix shows strategies and payoffs for two firms that must decide how to price. [html Show more The following matrix shows strategies and payoffs for two firms that must decide how to price. [html] Is this a prisoners dilemma game? Answer: A monopolist has a constant marginal and average cost of $41 and faces a demand curve of QD = 100.000 1/10P. Marginal revenue is given by MR = 1000 20.Q. Calculate the monopolists profit-maximizing price. Answer: A monopolist has a constant marginal and average cost of $60 and faces a demand curve of QD = 400.000 1/2P. Marginal revenue is given by MR = 800 4.Q. Now suppose that the monopolist fears entry but thinks that other firms could produce the product at a cost of 79 per unit (constant marginal and average cost) and that many firms could potentially enter. Assume the monopolist charges the limit price What would the monopolists quantity be now? Answer: Given the price elasticity of -1.02 determine whether marginal revenue is positive negative or zero. Answer: Given the price elasticity of -4.77 calculate the optimal markup (to three demicals). Answer: Suppose that individual demand for a product is given by QD = 8000 10P. Marginal revenue is MR = 800 0.2Q and marginal cost is constant at $20. There are no fixed costs. The firm is considering a quantity discount. The first 300 units can be purchased at a price of $455 and further units can be purchased at a price of $349. How many units will the consumer buy in total? Show less
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