(Multi-Variable Unconstrained Optimization -pete in a market with inverse demand given by p = 10-2g1 - 292. Firm 1 faces costfunction C = 2q1 and Firm 2 faces cost function C2 = 4q2. How much should eachfirm produce? What will be the market price?Two Cournot duopolists com-%3D%3D

Inverse demand function: P = 10-2q1-2q2 Firm 1 marginal cost = 2q1 Firm 2 marginal cost = 4q2

(Multi-Variable Unconstrained Optimization - pete in a market with inverse demand given by p = 10 - 291 - 292. Firm 1 faces cost function C1 firm produce? What will be the market price? Two Cournot duopolists com- 291 and Firm 2 faces cost function C2 = 4q2. How much should each %3D %3D

(Multi-Variable Unconstrained Optimization - pete in a market with inverse demand given by p = 10 - 291 - 292. Firm 1 faces cost function C1 firm produce? What will be the market price? Two Cournot duopolists com- 291 and Firm 2 faces cost function C2 = 4q2. How much should each %3D %3D

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

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DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the quantity of pencilstraded if the firms couldn’t cooperate?
10. The platypus is a shy and secretive animal that does not breed well in captivity. But two breeders, Sydney and Adelaide, have discovered the secret to platypus fer- tility and have effectively cornered the market. Zoos across the globe come to them to purchase their output; the world inverse demand for baby platypuses is given avby P=1,000-20, where Q is the combined output of blu Sydney (qs) and Adelaide (qA). vide a. Sydney wishes to produce the profit-maximizing quantity of baby platypus. Given Adelaide's choice of output, 9A, write an equation for the residual demand faced by Sydney. 19125 non c. ab. Derive Sydney's residual marginal revenue curve. Assume that the marginal and average total cost of raising a baby platypus to an age at which it can be sold is $200. Derive Sydney's reaction function. d. Repeat steps (a), (b), and (c) to find Adelaide's reac- tion function to Sydney's output choice. 18 e. Substitute Sydney's reaction function into Adelaide's to solve for…
Gary's Gas and Frank's Fuel are the only two providers of gasoline in their town. Below is the demand schedule for the market of gasoline. Assume that the cost of producing gasoline is 3 per gallon (AC=3, FC-D0). Suppose that the two producers collude (split production and profits evenly), what are the joint profits of these two firms? Q demanded (in gallons) 10 12 4 Market price (in dollar) $22 $20 $18 $16 $14 $12 $10 $8 $6 $0 O $27 O None of these options is correct. $55 O $72 O $36 50 00 3)
2. The market for dark chocolate us characterized by Cournot duopolists - Honeydukes and Wonka industries. The market demand for dark chocolate is:P = 8 - 0.005Qdwhere P is the price per bar in dollars and Qd is dark chocolate's daily quantity demanded in bars (use qh to represent the quantity of dark chocolate sold by Honeydukes and qw to represent the quantity of dark chocolate sold by Wonka Industries). Honeydukes has a constant marginal cost of $2.50 per bar, while Wonka Industries has a constant marginal cost of $3.00 per bar. The firms move simultaneously in choosing their profit-maximizing quantity of output.a. Given the firms move simultaneously, what is the equation for Honeydukes' reaction function with qh expressed as a function of qw?b. Given the firms move simultaneously, what is the equation for Wonka's reaction function with qw expressed as a function of qh?c. What quantity of dark chocolate will each firm produce in equilibrium and what price will be established for a…
QUESTION 4: The graph below shows the demand and costs data for a one of firms operating in a market with a highly differentiated product/All underlying work must be shown MC ATC $11.50 $10.00 $9.00 $6.00 D MR 200 400 700 s00 Quantity A) Refer to the graph above. If the firm in the graph above maximizes profit, it will produce units of output and charge price per unit. A) 400; $10 B) 600; $6 C) 900; $9 D) 600; $11.50 B) Refer to the graph above. At the profit maximizing output level, the firm from above will earn: A) zero economic profit. B) $900 total economic profit. C) $2,700 economic profit. D) $2,700 economic loss. C) Refer to your answer above. You can conclude that if there are no barriers to entry: a) new fims will enter this industry in the long run in a search of profit. b) existing firms will exit this industry in the long run because of the short-run losses. c) this industry is in long-run equilibrium, and there are no incentives to enter or exit. d) the price per unit of…
Two firms face the same inverse demand curve: P= 370– q, – 92 . Both firms have the same constant marginal cost: MC = 10. (a) %3D if both firms choose their output levels simultaneously, how much profits and consumer surplus will be earned in equilibrium? (b) Firm 1 is offered the following deal: by paying Z it can either (i) acquire a new technology that lowers its marginal cost to zero or (ii) have to opportunity to produce output before firm 2. Which option would it take and what is the maximum Z it would be willing to pay?
5. Consider a market where there are two mers with inverse demand func- consu tions p(q1) = 10 -91 and p(q2) = 5-92. (a) Suppose there is a single firm with inverse supply function p(q) = }q. Find the competitive equilibrium. (b) Find the elasticity of demand and supply at the equilibrium. (c) Suppose instead that there are three firms with the identical inverse sup- ply function given in part (a). Find the competitive equilibrium.
Consider any market that has a demand curve given by: Qd = 240 - 2P. Where Qd is the total quantity demanded in the market, given in millions of units and P is the market price, calculated in monetary units. Imagine that there are 2 Cournot oligopolists operating in this market with Cmg = CVme = 15 and fixed monthly costs equal to 1,400. About this market, ask yourself: a) What is the profit of each of the oligopolists? b) Imagine that one of the companies managed to implement a process innovation capable of halving its Cmg and CVme, so that they would go from 15 to 7.5. This investment implies an additional monthly expense of $1,800. Discuss the statement: "If this situation occurs, the innovative company will not implement variable cost reduction, as the quantity supplied in the market will increase very little; prices will remain very close to what they are today and its profits will not increase"
A study of ethanol as a transportation fuel reveals that the competitive equilibrium is expected to be at a price of $4 per gallon and a consumption rate of 100 million gallons/day. For a production rate of 10 million gallons/day, the marginal cost is found to be $1 per gallon. Also, a a price of $10 per gallon the demand is 10 million gallons/day. Answer the following questions for this system. 1. Determine the equations for the demand and marginal cost lines. 2. Calculate the consumer and producer surplus for the market equilibrium. 3. It was discovered later that the above information ignored a government subsidy of 50 cents per gallon. How will the demand and marginal cost lines, and the competitive equilibrium, change if this subsidy is removed?
Question 3 The inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has al cost of production of C₁= 15*Q₁ and firm 2 has a cost of production of C₂=20*Q₂. 1) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices? What are the profits of firm 1 and 2? 2) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices? What are the profits of firm 1 and 2? 3) Suppose that firm play a Stackelberg game. First firm 1 sets the quantity in t=1, then, knowing which quantity firm 1 has set, firm 2 chooses the quantity in t=2. What are the Stackelberg quantities and prices? What are the profits od firm 1 and 2? Compared to part a) which firm benefits and which firm loses?
Suppose than an oligopolist is charging $20 per unit of output and selling 28 units each day. What is its daily total revenue? $ Also suppose that previously it had lowered its price from $20 to $18, rivals matched the price cut, and the firm's sales increased from 28 to 29 units. It also previously raised its price from $20 to $29, rivals ignored the price hike, and the firm's daily total revenue came in at $550. Which of the following is most logical to conclude? The firm's demand curve is a curve with a kink in it
Suppose than an oligopolist is charging $20 per unit of output and selling 28 units each day. What is its daily total revenue? $ Also suppose that previously it had lowered its price from $20 to $18, rivals matched the price cut, and the firm's sales increased from 28 to 29 units. It also previously raised its price from $20 to $29, rivals ignored the price hike, and the firm's daily total revenue came in at $550. Which of the following is most logical to conclude? The firm's demand curve is (Click to select) < Prev Ne 28 of 50