Question

Quantity Competition in an Oligopoly Market 2 Suppose the beverage industry's demand curve in South America is Q = 85.5 - .4 P. Coca Cola is a dominant firm in South America and they estimate that the supply curve for other small popular beverage companies is Qs = 10 + .2 P. Also assume that marginal cost for all companies is similar at MC = $15. 1. What is Coca Cola's net demand curve, its optimal quantity sales, optimal price for the market, and the quantity sold by the small companies as a group? 2. Suppose the small companies gain power and their new supply curve is Qs2 = 20 + .2 P and the governments in South America decide to tax Coca Cola to help pay for the added obesity and diabetes cases that are anticipated in the future. The government add (-7.5) to the new net demand curve for Coca Cola. What happens to market price, the optimal quantity for Coca Cola and the small companies? What share of the market is now held by small companies?

          Quantity Competition in an Oligopoly Market
2
Suppose the beverage industry's demand curve in South America is
Q = 85.5 - .4 P. Coca Cola is a dominant firm in South America and they
estimate that the supply curve for other small popular beverage companies is
Qs = 10 + .2 P. Also assume that marginal cost for all companies is similar at MC
= $15.
1. What is Coca Cola's net demand curve, its optimal quantity sales, optimal
price for the market, and the quantity sold by the small companies as a group?
2. Suppose the small companies gain power and their new supply curve is
Qs2 = 20 + .2 P and the governments in South America decide to tax Coca Cola to
help pay for the added obesity and diabetes cases that are anticipated in the future.
The government add (-7.5) to the new net demand curve for Coca Cola. What
happens to market price, the optimal quantity for Coca Cola and the small companies?
What share of the market is now held by small companies?

Quantity Competition in an Oligopoly Market
2
Suppose the beverage industry's demand curve in South America is
Q = 85.5 - .4 P. Coca Cola is a dominant firm in South America and they
estimate that the supply curve for other small popular beverage companies is
Qs = 10 + .2 P. Also assume that marginal cost for all companies is similar at MC
= 15.
1. What is Coca Cola's net demand curve, its optimal quantity sales, optimal
price for the market, and the quantity sold by the small companies as a group?
2. Suppose the small companies gain power and their new supply curve is
Qs2 = 20 + .2 P and the governments in South America decide to tax Coca Cola to
help pay for the added obesity and diabetes cases that are anticipated in the future.
The government add (-7.5) to the new net demand curve for Coca Cola. What
happens to market price, the optimal quantity for Coca Cola and the small companies?
What share of the market is now held by small companies?

Added by Steven A.

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