PROBLEM (5) (In a market with demand Q=780-p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q)=3(Q)^2. Calculating the market price under each of the 2 scenarios below, rank/order the Consumer Surplus in each scenario (don't calculate each CS; just rank them); (i) B and C jointly form the fringe supply and A is the dominant firm in the dominant firm model. (ii) They act as perfectly competitive firms-as if trying to maximize total surplus and minimize DWL-that is, their joint MC serves as the "market supply" for the competitive market. Please answer all the parts!

PROBLEM (5) (In a market with demand Q=780-p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q)=3(Q)^2. Calculating the market price under each of the 2 scenarios below, rank/order the Consumer Surplus in each scenario (don't calculate each CS; just rank them); (i) B and C jointly form the fringe supply and A is the dominant firm in the dominant firm model. (ii) They act as perfectly competitive firms-as if trying to maximize total surplus and minimize DWL-that is, their joint MC serves as the "market supply" for the competitive market. Please answer all the parts!

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PROBLEM (5) (In a market with demand Q = 780 - p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q) = 3(Q)^2. Calculating the market price under each of the 2 scenarios below, rank/order the Consumer Surplus in each scenario (don’t calculate each CS; just rank them); (i) B and C jointly form the fringe supply and A is the dominant firm in the dominant firm model. (ii) They act as perfectly competitive firms -as if trying to maximize total surplus and minimize DWL- that is, their joint MC serves as the “market supply” for the competitive market. Please answer all the parts!
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