Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.The marginal cost for firm 1 (The Leader) is given by mc1 = 12 Q.The marginal cost for firm 2 (The Follower) is given by mc2 = 9 Q. (Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .) How much consumer surplus is created by industry transactions ?
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Consider a Leader-Follower duopoly, the firms face an (inverse) demand function: Pb = 530 - 17 Qb.
The marginal cost for firm 1 (The Leader) is given by mc1 = 12 Q.
The marginal cost for firm 2 (The Follower) is given by mc2 = 9 Q.
(Assume firm 1 has a fixed cost of $ 157 and firm 2 has a fixed cost of $ 113 .)
How much
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- Suppose a market is served by two firms (a duopoly). The market demand function given by P = 1200 - Q_{1} - Q_{2} where Q_{1} is the output produced by firm and Q_{2} is the output produced by firm 2 . Firm cost of production is given by the function C(Q_{t}) = 120Q_{t} and firm 2's cost of production is given by the function C(Q_{2}) = 120Q_{2} The average cost of firm 1 is given by A*C_{1} = 120 and the average cost of firm 2 is given by A*C_{2} = 120 Marginal profit function for firm 1: Delta pi 1 Delta Q 1 equiv1080-2Q 1 -Q 2; (d*pi_{2})/(Delta*Q_{2}) = 1080 - Q_{1} - 2Q_{2} Marginal profit function for firm 2: What will be the equilibrium profit levels earned by the Stackelberg leader firm and the Stackelberg follower firm?Suppose the inverse demand for a product produced by a single firm is given by: P = 64 – 4(Q) and this firm has a marginal cost of production of: MC = 8 1. If the firm cannot price-discriminate, what is the profit-maximizing price Number and level of output? Number 2. If the firm cannot price-discriminate, what is : -the consumer surplus Number , -the producer surplus Number -the dead-weight loss Number 3. If the firm can practice perfect price discrmination, what output level will it choose? Number -the consumer surplus Number -the producer surplus Number -the dead-weight loss Number. No hand written solution and no imageA firm with market power faces the demand function q = 2,000 – 40P. The firm's marginal cost function is MC(q) = 10 + 0.002q. If the firm establishes a block pricing structure with two different prices and maximizes producer surplus, identify consumer surplus, producer surplus, and total surplus. Suppose that the two prices the firm will use to maximize producer surplus are $24.684 and $37.342. The production cost is 11,151.84. (Give your answers to two decimal places.) consumer surplus: $ 6410.83 Incorrect producer surplus: $ 20253.16 total surplus: $ 26613.35
- There are two firms selling differentiated products. Firm A faces the following demand for his product: QA=20-1/2PA+1/4PB Firm B faces the following demand: QB=220-1/2PB+1/4PA PA represents the price set by firm A. PB represents the price set by firm B.Assume that the marginal cost is zero both for firm A and firm B.What are the equilibrium prices of a simultaneous price competition?What would the equilibrium prices be if A is the leader and B is the follower?Since you know all about perfect competition, monopoly, and oligopoly, we can find out how various types of firms might feel about uncertainty concerning the prices of its factors of production and output. Consider a profit-maximizing firm that produces a single good from several factors. The firm is characterized by a production function y = f(x1, ... , Xn), where y is the level of output obtainable from factor inputs x1, ... , Xn. We will use p to denote the price of the output good, and Wi to denote the price of factor input i. When there is uncertainty a priori about these prices, the firm is allowed to choose its production plan after any uncertainty in prices resolves. (c) Finally, consider this question in the context of a von Stackelberg duopoly. Two firms produce an undifferentiated commodity for which demand is given by P = A - X, where P is price and X is total supply. Demand-is unchanging. Each firm has production technology with a fixed cost F for producing anything at…A private golf club has two types of members. Serious golfers each have the demand curve Q = 250 - 10P, where Q represents the number of rounds played per year and P is the per- round price. Casual golfers have the demand curve Q = 100 - 10P. The club has 5 serious and 60 casual golfing members and faces a constant marginal cost and average cost of $ 5 per round played by either type of member. The club cannot distinguish high demanders from low demanders but is considering deploying a 2-part tariff pricing system? Specifically, the club is considering a per-unit price of $5 and a per-unit price of $6. What should they do and what are the profits they will earn? Be very clear in how you arrive at your answer.
- Consider two price-setting oligopolies supplying consumers in a certain region of a country. Firm 1 employs many of the people living there and the local government subsidizes its operations. In all other respects, the firms are identical-they have the same constant marginal cost, MC = 4, and produce the same good. The demand function for Firm 1 is q1 = 600 - 50p1 - 20p2 and for Firm 2 is q2 = 600 - 50p2 - 20p1, where p1 is Firm 1's price and p2 is Firm 2's price. a. What are the Nash-Bertrand equilibrium prices and quantities without the subsidy? b. What are they if Firm 1 receives a per-unit subsidy of S = 1? Compare the two equilibria.Gamma and Zeta are the only two widget manufacturers in the world. Each firm has a cost function given by: C(q) = 10+20q + q^2, where q is number of widgets produced. The market demand for widgets is represented by the inverse demand equation: P = 200 - 2Q where Q = q1 + q2 is total output. Suppose that each firm maximizes its profits taking its rival's output as given (i.e. the firms behave as Cournot oligopolists). a) What will be the equilibrium quantity selected by each firm? What is the market price? What is the profit level for each firm? Equilibrium quantity for each firm__ price__ profit__ b) It occurs to the managers of Gamma and Zeta that they could do a lot better by colluding. If the two firms were to collude in a symmetric equilibrium, what would be the profit-maximizing choice of output for each firm? What is the industry price? What is the profit for each firm in this case? Equilibrium quantity for each firm__ price__ profit__ c) What minimum discount factor is required…Consider a monopoly that faces the demand curve P = 20 − Q, and has the marginal cost curve MC = 2. a) Use the demand curve to find the equation of the marginal revenue curve. b) Find the profit-maximizing price and quantity for this monopoly if the monopoly uses uniform pricing. What is the producer surplus? c) Now, suppose the monopoly wants to increase profits using block pricing. The total cost the monopoly incurs is T C = 2Q. Find the optimal quantities, Q1 and Q2, and their corresponding optimal prices, P1 and P2 that maximize profits using a two-block pricing scheme. What is the new producer surplus? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Assume the inverse demand function in a market is given by P(Q) = 500 - Q where Q is the total industry output, that is the sum of the output of all firms in the market. There are two firms (indexed by i = 1,2) who both have a cost of producing the good given by c(qi) = 10 * qi The two firms are competing in the Cournot manner, that is they choose their quantities simultaneously in order to maximize profits.The inverse demand curve for a product is p = 20 - 0/5, where Q is the total volume brought to the market. At present two firms serve this market. Firm 1 has constant marginal costs of 5, while Firm 2 has constant marginal costs of 2. Both firms have fixed costs of 100. a) Assuming the fixed costs are sunk, calculate the equilibrium quantities, price and profits for the two firms. b) Now assuming the fixed costs are not sunk, calculate the equilibrium quantities, price and profits for the two firms. c) Discuss any competition issues raised by your answer in part b). d) Discuss the theoretical relevance of sunk costs to competition in markets.American Airlines (A) and Hawaiian Airlines (H) are two large airlines in the US market. The market has Market Demand: P = 506 - QM where QM denotes the number of passengers of the total market per day. American Airlines operates with a Fixed Cost of $3400 per day no matter whether the plane flies or not and at a Marginal Cost of $9 per passenger. While Hawaiian Airlines operates with a lower Fixed Cost of $2400 per day no matter whether the plane flies or not and at a higher Marginal Cost of $17 per passenger. Suppose now American Airlines and Hawaiian Airlines are competing in Price, i.e. they are in Bertrand Competition. Suppose both airlines can only set the price as an integer. If the airline loses the market, it supplied 0 quantity. Answer the following questions from the drop-down list: 1. American Airlines' Equilibrium Price = $ 2. Hawaiian Airlines' Equilibrium Price = $ 3. American Airlines' Equilibrium Quantity = 4. Hawaiian Airlines' Equilibrium Quantity = 5. Profit of…