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A dominant or price setting firm and several smaller price takers serve a market where total...

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Economics

A dominant or price setting firm and several smaller pricetakers serve a market where total market demand is Qd = 560 – 2Pand the combined supply from all the smaller firms is Qs = - 60 +2P.

  1. State the demand(Qdf=) and inverse demand(Pdf=) function for the dominant firm(df).
  1. If the dominant firm decides to produce 220 units,determine the price (P) it will set for the marketand the (combined) quantity supplied by all the small firms(Qs).
  1. Does this market meet the assumptions that the dominant firmhas at least a market share of 50%? (you must motivate your answernumerically)

Answer & Explanation Solved by verified expert
4.1 Ratings (831 Votes)
Qs602PWe can say that quantity supplied by smaller firms iszero for price less    See Answer
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