« previous next »

Author Question: Suppose two duopolists operate at zero marginal cost. The market demand is p = a - bQ. If firm 1 is ... (Read 53 times)

jlmhmf

  • Hero Member
  • *****
  • Posts: 552
on: Jul 1, 2018
Suppose two duopolists operate at zero marginal cost. The market demand is p = a - bQ. If firm 1 is the Stackelberg leader, what level of output will it choose?
 
  A) q1 = (a - bq2)/2b
  B) q1 = (a - 2bq2)/2b
  C) q1 = a/b
  D) q1 = a/2b

Question 2

XYZ Co operates in a competitive market. Its marginal product of labor is 1/L, and it takes the wage and price as given. Derive the firm's short-run demand for labor as a function of w and p. How much labor will the firm hire if w = 2 and p = 10?
 
  What will be an ideal response?
Microeconomics ¦ Perloff ¦ 8th Edition
Buy Test-Bank


Juro

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jul 1, 2018
Answer to Question 1

D

Answer to Question 2

Setting w = p  MPL yields w = p/L or L = p/w. At w = 2 and p = 10, the firm hires 5 units of labor.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Cyanide works by making the human body unable to use oxygen.

Did you know?

To maintain good kidney function, you should drink at least 3 quarts of water daily. Water dilutes urine and helps prevent concentrations of salts and minerals that can lead to kidney stone formation. Chronic dehydration is a major contributor to the development of kidney stones.

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates’s recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

It is believed that humans initially contracted crabs from gorillas about 3 million years ago from either sleeping in gorilla nests or eating the apes.

The Increasing Cost of Health Care, 1960–2010 The Increasing Cost of Health Care, 1960–2010
Attention and memory are in demand during circle time. Attention and memory are in demand during circle time.
The demand for cheap coal to generate electrical power is rising The demand for cheap coal to generate electrical power is rising
Infant formula is available in several forms and varies in cost and ingredients Infant formula is available in several forms and varies in cost and ingredients
Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ... Suppose that we have a sample space with five equally likely experimental outcomes: E1, E2, E3, ...
During a period of high power demand, the voltage output of the power company is reduced by ... During a period of high power demand, the voltage output of the power company is reduced by ...
Video: Phlebotomy

For a complete list of videos, visit our video library