Economics assignment

1)The demand curve for golf at the O’Keefe golf club is P = 200 – Q The marginal cost to offer a round of golf is 50. What profit can O’Keefe make? Compare O’Keefe’s profit with the profit that would have accrued if for each round of golf O’Keefe had received a price equal to the average price (total revenue/quantity) that he received per round of golf? Why the difference? 2) Part 1: Two firms, A and B. Both have identical total costs functions of TC = 1000 + 8Q + 1Q-squared Their market demand curve is P = 200 –Q = 200 – Qa – Qb If they are engaged in price competition, what is the profit and output (hint, perfect competition). Part 2: The firms now collude. Their marginal costs are Qa = – 8 + MCa Qb= – 8 + MCb What will output and profits be under this arrangement (hint, monopoly) 3) Part1: Does either pure price competition or collusion seem plausible. If not, two firms might compete on the basis of quantity. (One possibility, split total demand between them, 50-50). Using the total demand curve and cost functions from the previous part, indicate what the firms should do, and why. Part 2: Finally, the two firms have separate products, 1 and 2, which are substitutes. Their inverted demand curves (price and quantity are reversed) are Q1 = 200 – 6P1 + 4P2 Q2 = 200 – 6P2 + 4P1 Show how these firms would behave: