Two firms produce a homogeneous product. Inverse demand is P(Q)=D-Q. Firm 1 has a constant marginal cost of c1 and firm 2 has a constant marginal cost of c2. Assume that D>c2 >c1 >0. a)  Solve for the competitive equilibrium price and output level for each firm. b)  Solve for the Cournot equilibrium price and output level for each firm. c)  What is the total deadweight loss arising from Cournot competition in this market d)  Productive inefficiency refers to the extra costs to produce a given amount relative to the lowest cost method of producing that amount. How much of this loss is due to productive inefficiency rather than market power?

If the inverse demand for bean sprouts were given by P(Y) = 430 − 2Y and the total cost of producing Y units for any firm were TC(Y) = 10Y and if the industry consisted of two Cournot duopolists, then in equilibrium each firm's production would be

Assume there are two firms, firm A and B, engaged in Cournot competition. The industry demand curve is given by P = 220 - Q, where Q = QA + QB denotes industry output. Each firm faces a marginal cost of production equal to $16. In equilibrium, what will be the output level of firm A?

What is the homogeneous-good duopoly Cournot equilibrium if the market demand function is Q=4,000-1,000p, and Firm l's and Firm 2's variable cost functions are V (q1) = 0.22qlandV (q2) = 0.22q2 , respectively. Select one alternative: Both firms produce 1300 units of outpuit. Both firms produce 1280 units of output. Both firms produce 1240 units of output. Both firms produce 1260 units of output.

Consider Cournot competition with n identical firms. Suppose that the inverse demand function is linear with P(X) = a - bX, where X is total industry output, a; b > 0. Each firm has a linear cost function of the form C(x) = cx, where x stands for per firm output. It is assumed that a > c. a. At the symmetric equilibrium, what are the industry output and price levels? What are the equilibrium per firm output and profit levels? What is the equilibrium social welfare (defined as the difference between the area under the demand function and total cost)? b. Now let m out of n firms merge. Show that the merger is profitable for the m merged firms if and only if it involves a pre-merger market share of 80 percent. c. Show that each of the (n – m) non merged firms is better off after the merger. d. Show that the m-firm merger increases industry price and also lowers consumer welfare.  

Suppose that the market consists of 6 identical firms , that the market demand curve is P=200-2Q and that each firm's marginal cost is 32. The cournot equilibrium quantity per firm is q=_____________________ and the equilibrium quantity in the market is Q=______________________. The market price is P=$______________ per unit.

Consider a market where the inverse demand function is P = 400 – 20Q, where Q is the aggregate output. Assume there are three firms which compete à la Bertrand. a)What is the equilibrium price and the corresponding aggregate output if all firms have a constant marginal cost equal to 40? b)What is the equilibrium price and the corresponding aggregate output if one firm has a constant marginal cost equal to 40 and the other firms have a constant marginal cost equal to 100? c)What is the equilibrium price and the corresponding aggregate output if one firm has a constant marginal cost equal to 40 and the other firms have a constant marginal cost equal to 260?

Suppose the inverse market demand for manufactures is P(Q) = A – Q, where P and Q denote price and total goods produced and the parameter A denotes the size of the domestic market. Suppose any firm has a cost function, c(q) = cq, where A > c. Suppose there are two firm in the market which produce q1 and q2, where Q = q1 + q 2                                                                                                                                                    a. Solve for the Cournot equilibrium levels of output (Q*), price (P*) and markups.                                                                                       b. What is the impact of an increase in market size, A, on Q*, P* and markups when there are two firms? Provide some intuition for these predictions.                                                                                                                                                                                                   c.…

Suppose the iceberg lettuce industry is a Cournot duopoly with two firms: Xtra Leafy (a) and Yummy Farms (y). Xtra Leafy produces q units of output and Yummy Farms produces qy units of output. Aggregate market output is Q = x + y. The (inverse) market demand schedule is: p = 176 - 2Q Both firms have identical cost structures: MC = MC₁ = ATC₂ = ATC₁ = $12 Find Xtra Leafy's Cournot reaction function of the form: 9x = a + bay Where "a" is the reaction function's intercept and "b" is its slope. Note: Please review the formatting instructions above. If any value is negative, be sure to include its negative sign. a. a= b. b = Hint: One of your answers will be negative. Think about why.

wo firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB  (Note: qA = Firm A Output; qB =  Firm B Output) they must produce since they are the only two firms in the industry that manufacture this product. Their marginal cost (MC) is equal to their average cost (AC) and it is constant at MC = AC = X, for both firms.  Market demand is given as Q = Y – 2P (where P = price and Q = quantity).  Select any value for X between [21 – 69] and any value for Y between [501 – 999].  Using this information, calculate the Industry Price, Industry Output, Industry Profit, Consumer Surplus and Deadweight Loss under each of the following models:       (a) Cournot Model   error_outlineHomework solutions you need when you need them. Subscribe now.arrow_forward   Question Two firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB  (Note: qA =…