Firm A is the dominant firm in a market where industry demand is given by Qd = 48-4P. There are four "follower" firms, each with long-run marginal cost given by MC= 6 + Qf. Firm A's long run marginal cost is 6.
a. Write the expression for the total supply curve of the followers (qs) as this depends on price. (Remember, each follower acts as a price taker.)
b. Find the net demand curve-facing firm A. Determine A's optimal price and output. How much output do the other firms supply in total?
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Oligopoly Quantity competition is assessed.