Consider a market with two fims that face demand curves p1 a-bq1 -Bq2 p2 = a bq2 - Bq1. Which of the following statements are true? A. The value of B/b indicates the extent of production differentiation. B. The value of ß indicates the extent of production differentiation. C. If B-0, that suggests the market is a monopoly. D. If B-1, that suggests the market is a monopoly. E. If B-0, that suggests the product is a homogeneous good. F. If B=b, that suggests the product is a homogeneous good.
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- 1. there are two companies (company 1 and company 2) that operate in a market where both firms produce a homogenous item. The two companies sell the item in a market where the demand function is given by: Q = 22 – 0.50P. Now if Q 11 where Q = q1 + q2 is the total market output and qa is company a's output, a = 1,2. company s's cost function is: Ca (qa) = 4qa. Assume the two companies can now collaborate and act as a single monopoly firm. Calculate that the market price that each company pays, EQM quantities each company sells, the profits that each company makes. i)The market for fidgets has only three firms, (A, B, and C), that compete in quantities. The market shares of the firms are sA = 60%, sB = 30%, and sC = 10% respectively. The demand in the market is P = 1 − Q. The marginal cost of firm A is zero. (a) Calculate the HHI in this market (in the year of your data). (b) Suppose that firm B buys firm C. (i) What type of merger would this be? (ii) According to EU rules (on HHI level and change), would this merger be concerning? (iii) According to US rules (on HHI level and change), would this merger be concerning? (c) Call the merged firm BC. Suppose that, after the merger, A and BC compete a la Cournot again and the market shares of the firms are in equilibrium sA = 60% and sBC = 40%. What must be the marginal cost firm BC? Comment on your answerThe figure shows the market demand curve for telephone calls. Suppose the marginal cost of a telephone call is 2 cents a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry. Price and costs (cents per minute) If the firms in the industry operate as perfect competitors, there are minutes of calls made per hour. 4- A. more than 7 million and less than or equal to 9 million B. between 0 and 3 million 3- OC. more than 3 million and less than or equal to 5 million O D. more than 5 million and less than or equal to 7 million 2- O E. more than 9 million 1- D MR 10 12 Quantity (millions of minutes of calls per hour)
- Suppose we have two identical fırms A and B, selling identical products. They are the only firms in the market and compete by choosing quantities at the same time. The Market demand curve is given by P=287-Q. The only cost is a constant marginal cost of $13. If Firm A produces a quantity of 60 and Firm B produces a quantity of 33, what is market price? Enter a number only, no $ sign. 194Consider a market of 6 firms that compete through production. Demand is given as P = 220 – 2Q. Each firm has a marginal cost of $20. a. What will be the equilibrium firm quantities, market price, and firm profits? b. Suppose two firms merge in this market to become a leader. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the firms to merge into a leader? Note that n = 5 after the merger. c. Suppose another two firms merge to form a second leader in the market. What will be the new equilibrium firm quantities, market price, and firm profits? Was it profitable for the followers to merge into a co-leader? Note that n = 4 and L = 2 after the merger:Q3. There are two firms selling differentiated products. Firm A faces the following demand for his product: e, = 20 – -P, + -P, 2. Firm B faces the following demand: 1 P. +-P, 2. 0, = 220- 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?
- Consider a market with free entry and exit where all firms are identical and have the following TVC schedule and a fixed cost of 32. Q 1 2 3 4 5 6 7 8 9 10 TVC 12 20 24 28 34 42 52 64 78 94 And let demand for this good be given by the following schedule. P 2 4 6 8 10 12 14 16 18 20 QD 1700 1600 1500 1400 1300 1200 1100 1000 900 800 a. Now assume that the production of this good comes with an external cost of $4. On a graph show the supply, demand and marginal social cost for this good. Also indicate the efficient quantity and the dead weight loss. b. Considering that the equilibrium quantity is…3. Suppose there are only two firms in an industry selling an identical product where the quantity produced must be set well in advance of the good being sold in the market (and thus the quantity cannot be changed rapidly). The market demand for this good is given by the following equation: Q = 1,000 - 4P. Firm A's marginal cost of production is as follows: MC Α = 30 + 1.5Q₁. Firm B's marginal cost of production is as follows: MCB 100+ 2.5QB. Assume that each firm knows the other's cost of production. = a. If the two firm's decide their output simultaneously, how much output will each firm produce? What price will be charged in the market for the good? b. If the firm A's decides its output first and then B decides its output second, how much output will each firm produce? What price will be charged in the market for the good? Does A have an advantage by setting output first? Explain.There are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?
- A perfectly competitive firm is onsidered to be more generous in terms of price and quantity of output in comparison to firm belonged to monopoly and monopolistic markets. C. If firms incurring loss in this market begin to exit the market, what will happen to the market equilibrium? Demonstrate your answer using a simplified graph. d. The firm wishes to supply output more than the quantity determined under the equilibrium condition, is it worth to pursue?Two firms (called firm 1 and firm 2) are the only sellers of a good for which the demand equation is Here, q is the total quantity of the good demanded and p is the price of the good measured in dollars. Neither firm has any fixed costs, and each firm’s marginal cost of producing a unit of goods is $2. Imagine that each firm produces some quantity of goods, and that these goods are sold to consumers at the highest price at which all of the goods can be sold. A Cournot equilibrium in this environment is a pair of outputs (q1, q2) such that, when firm 1 produces q1 units of goods and firm 2 produces q2 units of goods, neither firm can raise its profits by unilaterally changing its output. Find the Cournot equilibrium. Determine whether the price at which the goods are sold exceeds marginal cost.Consider the fish market where demand is given by the following equation: P=52-Q where P is the price in dollars and Q is the quantity in kilos. All firms are identical and the marginal cost is 12. 15-If the market were competitive, what would the price be and how many units would be produced? You must provide your calculations. 16-If the market was made up of only one firm (a monopoly), what would the price be and how many units would be produced? You must provide your calculations. 17-If the market was made up of two firms (a duopoly) and they chose their level of production simultaneously: what would the price be and how many units would be produced by each firm? You must provide your calculations. 18-If the market was made up of two firms (a duopoly) and firm 2 was dominant (i.e. it chose its level of production first): what would the price be and how many units would be produced by each firm? You must provide your calculations. 19-Compare the quantities produced by each of the…