Alpha Vineyard and Beta Winery
Two firms, Alpha Vineyard and Beta Winery, produce and sell wine. The demand for Alpha’s wine is given by the equation, QA = 200 − PA + PB
Â
In this equation, the price of Alpha’s wine is PA per bottle, and the price of Beta’s wine is PB per bottle. Alpha Vineyard has a marginal cost of MC A = $20 per bottle, and a fixed cost of FC A = $6000. The demand for Beta’s wine is given by the equation,  QB = 9000 − 100PB + 40PA.Â
Â
Beta Winery has a marginal cost of MC B = $10 per bottle, and a fixed cost of FC B = $10,000. The two firms compete by simultaneously selecting prices.Â
Â
Question 1: Are the bottles of wine produced by Alpha Vineyard and Beta Winery, homogeneous products or heterogeneous products? Your answer must reference the two firms’ demand functions.
Â
Question 2: Find Alpha Vineyard’s best-response function.
Â
Question 3: Find Beta Winery’s best-response function
Â
Question 4: In equilibrium, what price does each firm charge for a bottle of wine? How many bottles of wine does each firm sell? What is each firm’s profit?Â
Â
Question 5: Which firm has the greater market power? Explain.
Â
Question 6: How would the equilibrium that you found in question 4 change if Beta Winery’s fixed cost increased to FC B = $100,000?
Â
Â
i need these to answered in detail with diagrams and equations provided
Attachments:
Answers
Status NEW
Posted 17 May 2017 12:05 AM
My Price 6.00
-----------
Attachments
file 1494982323-Solutions file.docx preview (56 words )
S-----------olu-----------tio-----------ns -----------fil-----------e
-----------Hel-----------lo -----------Sir-----------/Ma-----------dam-----------
T-----------han-----------k y-----------ou -----------for----------- yo-----------ur -----------int-----------ere-----------st -----------and----------- bu-----------yin-----------g m-----------y p-----------ost-----------ed -----------sol-----------uti-----------on.----------- Pl-----------eas-----------e p-----------ing----------- me----------- on----------- ch-----------at -----------I a-----------m o-----------nli-----------ne -----------or -----------inb-----------ox -----------me -----------a m-----------ess-----------age----------- I -----------wil-----------l b-----------e q-----------uic-----------kly----------- on-----------lin-----------e a-----------nd -----------giv-----------e y-----------ou -----------exa-----------ct -----------fil-----------e a-----------nd -----------the----------- sa-----------me -----------fil-----------e i-----------s a-----------lso----------- se-----------nt -----------to -----------you-----------r e-----------mai-----------l t-----------hat----------- is----------- re-----------gis-----------ter-----------ed -----------onÂ----------- th-----------is -----------web-----------sit-----------e.
-----------
H-----------YPE-----------RLI-----------NK -----------&qu-----------ot;-----------htt-----------p:/-----------/wo-----------rkb-----------ank-----------247-----------.co-----------m/&-----------quo-----------t; -----------\t -----------&qu-----------ot;-----------_bl-----------ank-----------&qu-----------ot;-----------
-----------Tha-----------nk -----------you-----------
-----------
Not Rated(0)