ECON 1B03 Lecture 10: Microeconomics – week 10
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Firm A and Firm B are two of the largest producers of a special pool-cleaning robot. Suppose that the marginal cost of making such a robot is constant at $1,500 per unit and there is no start-up cost. The demand for the robot is described by the following table.
Price |
Quantity |
TR |
MR |
MC |
TC |
Profit |
$8,500 |
5,500 |
|||||
7,500 |
6,500 |
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6,500 |
7,500 |
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5,500 |
8,500 |
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4,500 |
9,500 |
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3,500 |
10,500 |
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2,500 |
11,500 |
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1,500 |
12,500 |
a) Complete the columns for total revenue, marginal revenue, marginal cost, total cost, and profit in the table above.
b) If the market for the robots were perfectly competitive, what would the price and quantity be?
c) If there were only one supplier of robots (i.e., a monopoly), what would the price and quantity be?
d) If the two firms formed a cartel, what would be the price and quantity? If the two firms split the market evenly, what would Firm A