A market that follows the price leadership of a barometric firm has the following demand function:
$$Q D M = 1400 - 2 P$$ The follower firms have the following aggregate marginal cost function:
$$M C _ { F } = 100 + 0.50 Q M C$$ The barometric firm has a horizontal marginal cost curve equal to $300. Determine total industry output, market price, and the division of output between the barometric firm and the follower firms.

Question

A market that follows the price leadership of a barometric firm has the following demand function:
 $$Q D M = 1400 - 2 P$$ The follower firms have the following aggregate marginal cost function:
 $$M C _ { F } = 100 + 0.50 Q M C$$ The barometric firm has a horizontal marginal cost curve equal to $300. Determine total industry output, market price, and the division of output between the barometric firm and the follower firms.

Quizplus · Accepted Answer

The Answer of A market that follows the price leadership of a barometric firm has the following demand function:
 $$Q D M = 1400 - 2 P$$ The follower firms have the following aggregate marginal cost function:
 $$M C _ { F } = 100 + 0.50 Q M C$$ The barometric firm has a horizontal marginal cost curve equal to $300. Determine total industry output, market price, and the division of output between the barometric firm and the follower firms.

A Market That Follows the Price Leadership of a Barometric QDM=1400−2PQ D M = 1400 - 2 PQDM=1400−2P

A Market That Follows the Price Leadership of a Barometric $Q D M = 1400 - 2 P$