Problem 1: Roberts New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for the product is expressed as Q = 5000 25P where Q is the number of vacuum cleaners per year and P is in dollars. Cost estimation processes have determined that the firms cost function is represented by TC = 1500 + 20Q + 0.02Q2.
Problem 2: Greener Grass Company (GGC) competes with its main rival Better Lawns and Gardens (BLG) in the supply and installation of in-ground lawn watering systems in the wealthy western suburbs of a major east-coast city. Last year GGCs price for the typical lawn system was $1900 compared with BLGs price of $2100. GGC installed 9960 systems or about 60% of total sales and BLG installed the rest. (No doubt many additional systems were installed by do-it-yourself homeowners because the parts are readily available at hardware stores.)