Glyde Air Fresheners is the dominant rm in the solid room aromatizer industry, which has a total market demand given by Q = 80 - 2P. Glyde has competition from a fringe of four small rms that produce where their individual marginal costs equal the market price. The fringe rms each have total costs given by TCi = 10Qi +2Q2 . If Glyde's total costs are given by TC.G = 100 + 6QG, what price should Glyde establish for air fresheners? -Step 1:Start by finding the amount produced by each small firm, if the market price is P.

You are told that they produce at Marginal Cost = Price

MC = 10 + 4Q

P = 10 + 4Q

Q=(P-10)/4

There are 4 identical small firms, so the total they produce is

Q=4*(P-10)/4

Q=P-10

Step 2Find the demand curve faced by the large firm

The demand curve faced by the large firm is the totla market demand, less the amount produced by the other firms:

Qd = 80 - 2P - (P-10)

Qd = 90 - 3P

P = (90-Qd)/3

Step 3Find the Total revenue function of the large firm.

The demand curve is the average revenue. Muliply by Q to get the Total Revenue.

P = (90-Q)/3

PQ = TR = Q(90-Q)/3

TR = 90Q - Q^2

Step 4

Now you have the total revenue and total cost functions for the large firm. Find the price by equating MC = MR