What is the best response of firm 1 if firm 2 chooses an output level of 200? (input awhole number:)145The best response function of firm 1 with respect to firm 2's quantity choice takesthe form:91 (92) = = w* (x−-Y * 92 − 2)-where (w,x,y,z) are parameters of the problem. Solve for this best response functionand provide the product (w*x*y*z) in the next blank:What is the Nash Equilibrium quantity produced by firm 1?(round to the nearest whole number)163 Assume the inverse demand function in a market is given byP(Q) = 500 - QwhereQis the total industry output, that is the sum of the output of all firms in the market.There are two firms (indexed by i = 1,2) who both have a cost of producing the goodgiven byc(qi)=10 * qiThe two firms are competing in the Cournot manner, that is they choose theirquantities simultaneously in order to maximize profits.

Market Demand function : P = 500 - Q => P = 500 - (q1 + q2 ) Where , Q = Total Quantity for two…

Answered: What is the best response of firm 1 if…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A firm has the production function f(x1, x2) = ln(x1) + In(x2). It operates in perfectly competitive markets. The output price p and the input prices w, and we are all strictly positive. (a) Solve the input demand functions. (b) Solve the supply function. (c) Formulate the profit function and apply Hotelling's lemma to check that the supply function of your previous answer was correct. (d) Solve the conditional demand functions and the cost function of the firm
When the admission price for a baseball game was $4 per ticket, 50,000 tickets were sold. When the price was raised to $5, only 45,000 tickets were sold. Assume that the demand function is linear and that the variable and fixed costs for the ball park owners are $0.10 and $95,000 respectively. (a) Find the profit P as a function of x, the number of tickets sold. P(x) = (b) Select the graph of P. y 150000 y 150000 150 000 100 000 100 000 100 000 50 000 50 000 50 000 20000 40 000 60 00p 20000 40 000 60 000 20000 40 000 60 000 - 50 000 -50 000 -50 000 -100 000 100000 100000 The xy-coordinate plane is given. The curve starts at the approximate point (0, 3,000), goes up and right becoming less steep, and exits the window at the approximate point o-150000 O o-150000L O O (70,000, 69,000). 150000 100 000. 50 000- 20000 40 000 60 do0 - 50 000 100 000- o 150 000
The business venture involves the sale of decorative jewelry cases. It costs the startup $280 to produce 40 decorative jewelry cases a week while it costs $320 to produce 60 decorative cases per week as well. you and your partners are told that the demand, x, for your product is given as a linear function of price, p, where p(x)=15−0.02x Use the information above, to answer the following questions: 1. Given that the break even points are 16 and 634, If the intention is to make at most 800 jewellery cases a week, what range of quantity demanded can the startup ensure a profit is made. 2. Determine the Maximum Profit that can be made by this new business venture.
A competitive firm produces a product using the function f(x1,x2)=8x1/21x1/22f(x1,x2)=8x11/2x21/2. The factor prices are p1=$2.50p1=$2.50 and p2=$4p2=$4 and the firm can purchase as much of either factor at the given prices. What is the firm's marginal cost? a. None of the above b. ≈$1.07 c. ≈$2.32 d. ≈$1.74
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Suppose that Quality Widgets Limited is an efficient small firm with cost functionC(q)=q3 - 10q2+100q + 196 and suppose also that the maximum level of weekly production is L=10. Determine:(d) their breakeven point, (e) their supply set.
This question deals with cost curves and isoprofit curves. Keep in mind that the formula for a firm's cost function is: TC = FC + C(Q) TC → Total Costs: FC → Fixed Costs: C(Q) → Cost of production*Quantity produced → also known as Variable Costs Q2: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC = 2Q --- Equation (1) %3D - Firm B: TC = 10 + 2Q --- Equation (2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten batches of 8,000. The cost of production per unit for each firm is $2. Firm B has a fixed cost of $10. (a) Plot isoprofit curves valuing $34,000 and $60,000 for each of the two firms. Can you provide an explanation for any differences that may exist? (b) Use the information given about firms A and B and appropriate diagrams/figures to explain how the equilibrium for both firms will change if a rival company increases its…
Determining Rent in a Market with Low-Cost and High-Cost Firms Suppose firms in a competitive market for house paints have the cost function C(q)=8+2q+2q?. The market is in a long-run equilibrium. (a) What is the price of house paint? (b) Suppose a subset of the firms in the market have developed technology that reduces their costs by 50% at any output level. That means these low-cost firms have the cost function C(q)=4+q+q?. How much additional profit do these low-cost firms earn from the technology? (c) Suppose over time, more and more firms adopt the lower-cost technology. What will be the price of paints in the long run?
Suppose the Sunglasses Hut Company has a profit function given by P(q) - 0.01q² + 5q - 40, = where q is the number of thousands of pairs of sunglasses sold and produced, and P(q) is the total profit, in thousands of dollars, from selling and producing a pairs of sunglasses. A) Find a simplified expression for the marginal profit function. (Be sure to use the proper variable in your answer.) Answer: MP(q) = B) How many pairs of sunglasses (in thousands) should be sold to maximize profits? (If necessary, round your answer to three decimal places.) Answer: thousand pairs of sunglasses need to be sold. C) What are the actual maximum profits (in thousands) that can be expected? (If necessary, round your answer to three decimal places.) Answer: thousand dollars of maximum profits can be expected.
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Suppose that the inverse demand for aloe juice in Greece is given by P = 100 – 2Q, where P is the price per bottle (1000ml) of aloe juice and Q is the total quantity, i.e., number of bottles, supplied in the market. There are two aloe juice manufacturers in Greece, Aloe Health and Aloe Wealth, operating under similar cost conditions. Each manufacturer's cost function is C(q) = 4qi, i =1,2, where q¡ is the manufacturer's individual quantity produced and Q = qı + q2. (a) Based on demand conditions every year, they decide, independently of each other, the quantity of aloe juice that will be supplied, letting the market determine the price per bottle. Find the equilibrium price and each firm's profit in this market. %3D (b) Consider that the above two manufacturers form a cartel, agreeing to fix their total quantity in such a way that the market maintains a collusive price. For simplicity, the eventual cartel directory will determine the target total-quantity and price pair, and each firm…
A firm is able to adjust both L and K and has a production function q = KL, where K is the amount of capital and L is the amount of labor it uses as inputs. The cost per unit of capital is r and the cost per unit of labor is w. The (conditional) demand for capital (also known as the optimal level of capital) is given by: O qwr O the square root of qr/w O qw/r O q/wr O the square root of qw/r

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