3. Milky Moo and Mega Cow are the only sellers of milk. Milky Moo\'s supply func
ID: 1254714 • Letter: 3
Question
3. Milky Moo and Mega Cow are the only sellers of milk. Milky Moo's supply function is QsMMoo =12P-6
at prices above $0.50 and zero at prices below $0.50. Mega Cow's supply
function is QsMCow =9P-3 at prices above $0.33 and zero at prices below $0.33. At a price of $0.45
A. Milky Moo is the only supplier of milk
B. Mega Cow is the only supplier of milk
C. Both Milky Moo and Mega Cow supply milk
D. Neither Milky Moo nor Mega Cow supply milk
16. A residual demand curve
A. Shoes the relationship between the market price and the quantity demanded by consumers at
each price
B. Shows the relationship between a firm's output and the market price given the prices charged
by the firm's rivals
C. Shows the relationship between a firm's output and the market price given the outputs of the
firm's rivals
D. Shows the remaining demand for a good after a firm's rivals have sold their output
17. Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd=20,000-200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. The Cournot model describes the competition in this market. What is Alice's inverse residual demand function?
A. , Where the term in parentheses is constant
B. , Where the term in parentheses is constant
C. , Where the term in parentheses is constant
D. , Where the term in parentheses is constant
Explanation / Answer
3. B. Mega Cow is the only supplier of milk. Mega Moo's supply function is zero at prices below $.50. In other words, they won't sell any milk at a price lower than $.50 so at a price of $.45, they won't sell any milk. Therefore Mega Cow, who will sell milk for a minimum of $.33 will be the only supplier. 16. D. Shows the remaining demand for a good after a firm's rivals have sold their output Sorry, I have to go to class so I can't do the last 1. :S
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