a) Find the Cournot solution for the market price and output of mineral water and illustrate with a simple graph. b) The (inverse) demand function facing a mineral water monopolist is given by: P = 200 – 10Q The marginal revenue (MR) function is, therefore, given by: MR = 200 – 20Q Assuming again that marginal and total costs are zero, demonstrate that firms A and B have an incentive to cooperate and maximize joint profits. That is, compare profits earned in Cournot equilibrium to a situation of joint monopoly.

Please answer question d, e and f

Monopolists, unlike competitive firms, have some market power. A monopolist can increase price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Barriers to Entry Economies of Scale Scenario In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprofitable for competitors to enter the market. The Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the…

In a market with demand Q = 2,310 − p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q) = 3/2 Q^2 (with MC(Q) = 3Q, that is) Calculate the market price under each of the 6 scenarios below, (a) A, B, C collude as though they are all plants of the same single multi-plant monopoly. (b) A, B, C act as price taking perfectly competitive firms. (c) B and C act as two plants of a single multi-plant monopoly called “B+C”, which competes in quantities (Cournot competition) against A. (d) (WARNING: non-integer answer) As in (iii) above, but Firm A acts first and chooses its quantity as a leader and B+C follows (Stackelberg competition) (e) B and C jointly form the fringe supply and A is the dominant firm as in the dominant firm model. (f) A, B, C compete in quantities with each other (Cournot-Nash equilibrium). (HINT: Best Response equations should be symmetrical; hence there is a symmetric solution with qA = qB = qC as the Cournot-Nash equilibrium)