. MBI and Pear are the only two producers of computer. MBI started producing computers earlier than Pear. MBI's costs of production are given by C₁(y₁) = y? Pear's cost function is C₂(y₂) = 15 y₂ + y². The national demand for computers is y = 60 - p. a) Calculate the Stackelberg equilibrium in which MBI is the leader in this market. Indicate output levels, market price, and the profits of each firm. b) Suppose that both firms enter this market at the same time. Calculate the Cournot equilibrium and compare it to the situation in part (a).

. MBI and Pear are the only two producers of computer. MBI started producing computers earlier than Pear. MBI's costs of production are given by C₁(y₁) = y? Pear's cost function is C₂(y₂) = 15 y₂ + y². The national demand for computers is y = 60 - p. a) Calculate the Stackelberg equilibrium in which MBI is the leader in this market. Indicate output levels, market price, and the profits of each firm. b) Suppose that both firms enter this market at the same time. Calculate the Cournot equilibrium and compare it to the situation in part (a).

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section: Chapter Questions

Problem 10PA

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