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Ten firms compete in a market to sell product X. The total sales of all firms selling the product are $3 million. Ranking the firm's sales from highest to lowest, we find the top four firms’ sales to be $425,000, $385,000, $320,000, and $290,000, respectively. Calculate the four-firm concentration ratio in the market for product X.
Consider a firm that operates in a market that competes aggressively in prices. Due to the high fixed cost of obtaining the technology associated with entering this market, only a limited number of other firms exist. Furthermore, over 70 percent of the products sold in this market are protected by patents for the next eight years. Does this industry conform to an economist’s definition of a perfectly competitive market?
A firm sells its product in a perfectly competitive market where other firms charge a price of $110 per unit. The firm estimates its total cost as C(Q) = 70 + 14Q + 2Q2 .
A: How much output should the firm produce in the short run?
B: What price should the firm charge in the short run?
C: What are the firm’s short-run profits?
D: What adjustments should be anticipated in the long run?
The manager of a local monopoly estimates the elasticity of demand for its product is constant and equal to -4. The firm’s marginal cost is constant at $25 per unit.
A: Express the firm’s marginal revenue as a function of its price.
B: Determine the profit-maximizing price.