RussCo Game System is a perfect substitute with a similar product
Question # 00343762
Posted By:
Updated on: 07/22/2016 07:59 AM Due on: 07/22/2016
Managerial Economics
Homework #3
Consider the cost function
C(Q) = 400 + 50Q + 5Q2
for RussCo to produce its new Game System. Using that cost function for the Game
System, determine the profitmaximizing output and price for the RussCo Game
System, and discuss its longrun implications, under three alternative scenarios:
a. RussCo Game System is a perfect substitute with a similar product offered by Sony,
Nintendo and several other Game Systems that have similar cost functions and that
currently sell for $200 each
b. RussCo Game System has no substitutes and so is a
monopolist, and the demand for the RussCo Game System is
expected to forever be Q = 30 – (1/5)P – note you use the
earlier listed cost function
c. RussCo Game System currently has no substitutes, and
currently the demand for the RussCo Game System is Q =
80 – (1/5)P, but RussCo anticipates other firms can develop
close substitutes in the future. – note you use the earlier
listed cost function
Homework #3
Consider the cost function
C(Q) = 400 + 50Q + 5Q2
for RussCo to produce its new Game System. Using that cost function for the Game
System, determine the profitmaximizing output and price for the RussCo Game
System, and discuss its longrun implications, under three alternative scenarios:
a. RussCo Game System is a perfect substitute with a similar product offered by Sony,
Nintendo and several other Game Systems that have similar cost functions and that
currently sell for $200 each
b. RussCo Game System has no substitutes and so is a
monopolist, and the demand for the RussCo Game System is
expected to forever be Q = 30 – (1/5)P – note you use the
earlier listed cost function
c. RussCo Game System currently has no substitutes, and
currently the demand for the RussCo Game System is Q =
80 – (1/5)P, but RussCo anticipates other firms can develop
close substitutes in the future. – note you use the earlier
listed cost function
-
Rating:
/5
Solution: RussCo Game System is a perfect substitute with a similar product