Glyde Air Fresheners is the dominant firm in the solid room aromatizer industry,which has a total market demand given by Q = 80 - 2P.Glyde has competition from a fringe of four small firms that produce where their individual marginal costs equal the market price.The fringe firms each have total costs given by TC_i = 10Q_i + 2Q²_i.If Glyde's total costs are given by TC_G = 100 + 6Q_G,what are the total profits of the fringe firms?

Question

Quizplus · Accepted Answer

The correct answer is A.The fringe firms' total profits are equal to the total revenue minus the total costs. The total revenue is equal to the market price times the quantity supplied by the fringe firms. The total costs are equal to the sum of the total costs of each fringe firm. The market price is equal to the marginal cost of the fringe firms, which is equal to 10 + 4Q. The quantity supplied by the fringe firms is equal to the total market demand minus the quantity supplied by Glyde. The total costs of each fringe firm are equal to 10Q + 2Q^2. The total costs of the fringe firms are equal to the sum of the total costs of each fringe firm, which is equal to 40Q + 8Q^2. The total profits of the fringe firms are equal to the total revenue minus the total costs, which is equal to (80 - 2P) * (Q - Q) - (40Q + 8Q^2) = 32.

Glyde Air Fresheners Is the Dominant Firm in the Solid