Consider a hypothetical demand schedule for monosodiumQuantity of MSG demanded(millions of pounds)Price of MSGglutamate (MSG). Suppose that Ajinomoto holds 50% of($ per pound)the market, Jiali holds 30% of the market, and Quingdao$8holds 20% of the market.$720Suppose the three firms agree to form a cartel to fix$630production of monosodium glutamate. Assume marginalcost equals zero, and the output is split equally across$540$460the firms,$390$2110What quantity maximizes the cartel's profit?$1180SO300110 million pounds90 million pounds300 million pounds20 million poundsSuppose Ajinomoto's marginal cost remains equal to zero,but for Jiali and Quingdao, marginal costs rise above zero.How would this affect the incentive of Ajinimoto to actnoncooperatively and change its output?Ajinomoto will have an incentive to increase itsoutput of MSG.Ajinomoto will not have an incentive to changeits output.Ajinomoto will have an incentive to decrease itsoutput of MSG.

Consider a hypothetical demand schedule for monosodium glutamate (MSG). Suppose that Ajinomoto holds 50% of the market, Jiali holds 30% of the market, and Quingdao Price of MSG Quantity of MSG demanded ($ per pound) (millions of pounds) $8 holds 20% of the market. $7 20 Suppose the three firms agree to form a cartel to fix production of monosodium glutamate. Assume marginal cost equals zero, and the output is split equally across $6 30 $5 40 the firms. $4 60 $3 90 $2 110 What quantity maximizes the cartel's profit? $1 180 300 110 million pounds 90 million pounds 300 million pounds 20 million pounds Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero.

Consider a hypothetical demand schedule for monosodium glutamate (MSG). Suppose that Ajinomoto holds 50% of the market, Jiali holds 30% of the market, and Quingdao Price of MSG Quantity of MSG demanded ($ per pound) (millions of pounds) $8 holds 20% of the market. $7 20 Suppose the three firms agree to form a cartel to fix production of monosodium glutamate. Assume marginal cost equals zero, and the output is split equally across $6 30 $5 40 the firms. $4 60 $3 90 $2 110 What quantity maximizes the cartel's profit? $1 180 300 110 million pounds 90 million pounds 300 million pounds 20 million pounds Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.2P

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[Suppose] A Cmpany is the sole provider of electricity in the various districts of Dubai. To meet the monthly demand for electricity in these districts, which is given by the inverse demand function: P = 1,200 − 4Q, the company has set up two electric generating facilities: Q1 kilowatts are produced at facility 1 and Q2 kilowatts are produced at facility 2;        where Q = Q1 + Q2.       The costs of producing electricity at each facility are given by C1(Q1) = 8,000 + 6Q1 C2(Q2) = 6,000 + 3Q2 + 5Q22 Calculate the profit maximizing output levels of each factory? What is the profit maximizing level of price? What is the maximum profit?