cannot determine the exact price that results from this bilateral monopoly well as on other factors,such as the elasticities ofsupply and demand 13.Suppose the market for tennis shoes has one dominant firm and five fringe firms.The market demand is Q=400-2P.The dominant firm has a constant marginal cost of 20.The fringe firms each have a marginal cost of MC=20+5q. a.Verify that the total supply curve for the five fringe firms is ,=P-20. The total supply curve for the five firms is found by horizontally summing the five marginal cost curves,or in other words,adding up the quantity supplied by eac firm for any given price.Rewrite the marginal cost curve as follows: MC=20+5g=P 5a=P-20 9=5-4 Since each firm is identical,the supply curve is five times the supply of one firm for any given price: g=5-4=P-20 b.Find the dominant firm's demand curve. The dominant firm's demand curve is given by the difference between the market demand and the fringe total supply curve Q,=400-2P-(P-20)=420-3P the profit-maximizing quantity produced and price ca domi ant fir ed and price charged by each ofthe fringe firms The dominant firm will set marginal revenue equal to marginal cost.The marginal revenue curve can be found by recalling that the marginal revenue curve has twice the slope of the linear demand curve,which is shown below: 9。=420-3P P=140-5Q MR=140-5 We can now set marginal revenue equal to marginal cost in order to find the duced by the dominant firm,and the prico charged by the docannot determine the exact price that results from this bilateral monopoly because the price depends on the bargaining skills of the two parties, as well as on other factors, such as the elasticities of supply and demand. 13. Suppose the market for tennis shoes has one dominant firm and five fringe firms. The market demand is Q=400-2P. The dominant firm has a constant marginal cost of 20. The fringe firms each have a marginal cost of MC=20+5q. a. Verify that the total supply curve for the five fringe firms is  Qf = P − 20. The total supply curve for the five firms is found by horizontally summing the five marginal cost curves, or in other words, adding up the quantity supplied by each firm for any given price. Rewrite the marginal cost curve as follows:  MC = 20 + 5q = P 5q = P − 20 q = P 5 − 4 Since each firm is identical, the supply curve is five times the supply of one firm for any given price:  Qf = 5( P 5 − 4) = P − 20 . b. Find the dominant firm’s demand curve. The dominant firm’s demand curve is given by the difference between the market demand and the fringe total supply curve:  QD = 400− 2P − (P − 20)= 420− 3P. c. Find the profit-maximizing quantity produced and price charged by the dominant firm, and the quantity produced and price charged by each of the fringe firms. The dominant firm will set marginal revenue equal to marginal cost. The marginal revenue curve can be found by recalling that the marginal revenue curve has twice the slope of the linear demand curve, which is shown below:  QD = 420 − 3P P = 140 − 1 3 QD MR =140 − 2 3 QD . We can now set marginal revenue equal to marginal cost in order to find the quantity produced by the dominant firm, and the price charged by the dominant firm: