Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P = 128 - 4Q. The total cost function for each firm is TC(Q) = SQ. The price charged in this market will be $32 O $48 $12 O $56
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- Consider a homogeneous-product Cournot ollgopoly of 3 firms with cost functions TC(a) = 24, Sup- pose that the Inverse demand function Is P(Q) = 30 - Q. (a) Solve for Cournot-Nash equilibrlum. (b) Firm 1 and Firm 2 merge Into Firm A. Solve for the new Cournot-Nash equilibrlum. Provide an Intultive explanation for the decrease In the combined profit of the merged firms.1. Consider two duopolists who each have a constant marginal cost c = e2 = 3 and face inverse demand P = 15 – Q,where Q = Q1 + Q2 is the total output of both firms. 1. Find the Cournot equilibrium quantity for each firm, the resulting market price, and the profits for each firm. 2. Find the Stackelberg equilibrium quantities for each firm, and the price, and the profits for each firm supposing that Firm 1 is the industry leader. 3. Suppose that Firm 2 figures out a way to lower its marginal cost to ez = 0 while firm 1 still has a marginal cost equal to 1: c = 3. How does this affect the Cournot equilibrium quantities, price, and profits? 4. How does this affect the Stackelberg equilibrium (with Firm 1 still as the leader) quantities, price, and profits?Consider two Cournot oligopolists, firm 1 and firm 2, in a homogenous product market. The market demand is P = 100 - 3Q and each firm has a constant marginal cost MC=10. The market price of equilibrium and total quantity in the market is: Select one: O a. P* 30 and Q* = 20 O b. P* 40 and Q* = 20 ○ C. P* 40 and Q* = 30 d. P20 and Q* = 30
- 1. Two firms (A and B) play a competition game (i.e. Cournot) in which they can choose any Qi from 0 to ¥. The firms have the same cost functions C(Qi) = 10Qi + 0.5Qi2, and thus MCi = 10 + Qi. They face a market demand curve of P = 220 – (QA + QB). a. Assume firm A chooses quantity first. Frim B observes this choice and then chooses its own quantity. What is Frim B's profit as a function of QA and QB? b. Firm B has MRB = 220 – 2QB – QA. What is firm B’s best response to an arbitrary QA selected by firm A? c. Given that firm A expects firm B’s best response, what is firm A’s profit as a function of QA? (Hint: the only unknown variable in the profit function should be QA) d. Firm A has MRA = 150 – 4QA/3. What are the equilibrium QA and QB selected in this game? e. What is the equilibrium price, and how much profit does each firm collect?Price MC 500 700 900 Quantity Five firms in an industry have equal and constant marginal costs and act as a cartel, with each firm agreeing to charge a price of $9. If they each sell an equal quantity of output, each firm will earn $ type your answer in revenue. If one firm decides to increase its quantity sold by 200 units, the cheating firms revenue will increase by $ type your anwer and the remaining firms will see tir total revenue decrease by $ type your anwwer.Consider a homogenous product duopoly in which the two firms, 1 and 2, compete by choosing their respective quantities, Q1 and Q2. Market demand is given by Q=20−P, where P is the market price and Q= Q1+Q2. Firm 2’s total costs are given by TC2 = 2Q2 , while firm 1’s total costs areTC1= Q1^2 . (a) calculate To which firm would the ability to move first be most valuable? Explain fully. 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.
- 1. Best responses in a Cournot Oligopoly Firm A and Firm B sell identical goods Total market demand for the good is: The inverse demand function is therefore 1 P(QM) = 780 -Q=780 -0.02222QM 45 QM is total market production (i.e., combined production of firm's A and B. That is: Q(P) = 35, 100- 45P 2M = A +QB As a result, the inverse demand curve for each firm is: P(QA, QB) = 780- -1/32₁-752 45 Unlike the example in class, the two firms have different costs. = 4000A TCA (QA) TCB (QB) = 260QB = 780 -0.022220A -0.02222QB a. Using the demand function and the cost functions above, what is firm A's profit function. b. Using the profit function above and assuming that firm B produces Qg, calculate what firm A's best response is to firm B’s decision to produce QB- Note: Firm A's best response should be a function of B40 36 32 28 24 20 16 12 8 47 0 P 4 Firm in oligopoly market MC 2 MR MC 1 D 8 12 16 20 24 28 32 40. Assuming MC2 to be the true marginal cost curve for this oligopoly firm, what price will this firm charge? (a) $8 Ⓒ (b) $12 (c) $15 (d) $20 QThe demand is homogenous product, Cournot duopoly is P=100 -2(Q1+Q2) and the costs are C1=20Q1 and C2=15Q2 1. Determine the reaction function of each firm II. Calculate each firm's equilibrium output. II. Calculate market price. note : do it word form inverse market
- bok rint An oligopoly producing a homogeneous product is comprised of three firms that act like a cartel. Assume that these three firms have identical cost schedules. Assume also that if any one of these firms sets a price for the product, the other two firms charge the same price. As long as they all charge the same price they will share the market equally; and the quantity demanded of each will be the same. Below is the total-cost schedule of one of these firms and the demand schedule that confronts it when the other firms charge the same price as this firm. Complete the marginal-cost and marginal- revenue schedules facing the firm. erences Mc Graw Hill Output Total cost Marginal cost Price Quantity demanded Marginal revenue 0 1 23456 7 8 $0 180 300 480 720 1,020 1,380 1,800 2,280 Short Anewor LA JUL 26 $780 720 660 600 540 480 420 360 Toolbar navigation (a) What price would be charged, what output would be produced, and what profit would be made by this firm? (b) If the firms…Help me pleaseConsider a simple monopolistic competition industry (many firms) in whicheach firm in the industry has one store. The store costs $200 per week andthe marginal cost is $10 per unit of output in addition to the fixed cost of the store. Hint: Mathematically this problem can be solved just like a monopoly problem. (a) If the typical the demand facing each individual firm is QD = 40−P eachweek, what price will a typical firm in this industry charge? (Hint: IfQD = 40 − P then P = 40 − QD and MR = 40 − 2QD). (b) Is the firm making a positive profit? What is the producer surplus? Whatis the profit after fixed costs? (c) Will new firms enter the market if demand stays the same and new firmsface the same demand and have the same costs? (d) In general, what is the long run profit of an average firm in a monopolistically competitive market.