Answer to Question #131157 in Finance for Satyam

Question

MODULE IV : MARKET STRUCTURES
Case Study
Assume that two identical firms in a purely oligopolistic industry selling a homogenous product agree to share the maket equally. The total market demand function for the commodity is Qd = 240 – 10P. The cost schedules of the firms are given in the following table:

q1 40 50 60 80 q2 50 70 100
SMC1 (Rs.) 8 10 12 16 SMC1 (Rs.) 4 6 9
SAC1 (Rs.) 13 12.3 12 13 SAC1 (Rs.) 7 6 7

Question 1: Profits for this firm will be:
a. Rs. 420
b. Rs. 130 (wrong)
c. Rs. 350
d. Rs. 450
Question 2: When q1 = 40, What will be MR1?
a. 2
b. 8
c. 5
d. 4
Question 3: When q1 = 40, what will be the profit maximising output for the first firm?
a. 30
b. 60
c. 40
d. 20
Question 4: When q1 = 50, what will be MR1?
a. 7
b. 2
c. 4
d. 3
Question 5: When q1 = 60, what will be MR1?
a. 0
b. 2
c. 4
d. 6

Answer 1

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