The Duopolists Carl and Simon Face a Demand Function for Pumpkins

question 55

Multiple Choice

The duopolists Carl and Simon face a demand function for pumpkins of Q = 2,200 - 400P, where Q is the total number of pumpkins that reach the market and P is the price of pumpkins.Suppose further that each farmer has a constant marginal cost of $1.50 for each pumpkin produced.If Carl believes that Simon is going to produce Q_s pumpkins this year, then the reaction function tells us how many pumpkins Carl should produce in order to maximize his profits.Carl's reaction function is

• A)R_C(Q_s)= 400 - Qs/2.
• B)R_C(Q_s)= 2,200 - 800Q_s.
• C)R_C(Q_s)= 800 - Qs/2.
• D)R_C(Q_s)= 2,200 - 400Q_s.
• E)R_C(Q_s)= 1,200 - Q_s.

Justify the use of NPV as the "best" decision rule in principle for project evaluation.

Understand the concepts and tools of quality management.

Identify different types of control charts and their application.

Recognize the importance and method of sorting issues through Pareto analysis.

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Definitions:

Optimal Order Quantity

The most cost-efficient quantity of items to order that minimizes holding costs and ordering costs in inventory management.

Holding Cost

The expense incurred from storing inventory over a period, including costs related to warehousing, depreciation, insurance, and obsolescence.

Price Breaks

Discounts applied to a product or service based on the quantity purchased.

EOQ Model

Economic Order Quantity Model, a formula used in inventory management to determine the optimal order size that minimizes the total holding costs and ordering costs.