Oligopoly conduct: Example 1 Dominant Firm Theory (Price Leadership)

1.	Suppose Clorox did not exist: Equilibrium quantity = ______    Equilibrium price = ______
2.	Complete the following table to determine points on the demand curve facing Clorox:
		Price Total quantity demanded Quantity supplied  by fringe Excess demand = quantity  demanded of Clorox bleach $2.50 12 12 0  2.00 14 8 6  1.50        1.00        .50
3.	Plot the demand curve for Clorox in the righthand panel above.
4.	Derive the marginal revenue curve (MRc) for Clorox, and determine the profit-maximizing optimum.         Price = ______         Quantity supplied by Clorox = ______         Quantity supplied by fringe = ______         Quantity consumed = ______
5.	In the righthand panel, indicate the profits and welfare loss associated with Clorox acting as a price leader instead of producing the efficient quantity.
6.	Clorox's profits = ______ Suppose instead that Clorox produces just enough to capture the entire bleach market. Clorox's new profits = ______