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Question
In the town of Battle Springs, the market for fast food is dominated by Mr. Berger. The other companies tend to follow Mr. Berger's lead in setting price and style of burger. The total demand for cheeseburgers in Battle Springs is:P = $1.50 - $0.00015Q.
The marginal cost of producing and serving burgers at Mr. Berger is:
MCL = 0.25 + 0.0000417Q.
The competitive supply curve of burgers by all the other (competitor) firms is:
Pf = 0.50 + 0.000285Qf.
Compute the price that will be set in the market when Mr. Berger behaves as a dominant firm and maximizes profit for itself. Also, compute the production rate by Mr. Berger and the competitor firms.
Answer
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