QUESTION 2 In a Cournot duopoly firm 1's best-response function is downward sloping because when firm 2 produces more: Firm 1's marginal cost goes up, so firm 1 produces less. Firm 1's total cost goes up, so firm 1 produces less. Firm 1's marginal revenue goes down, so firm 1 produces less. Firm 1's average cost goes up, so firm 1 produces less.

Please help with these two: 1. Consider a Duopoly model, in which two firms decide a quantity simultaneously. If they collude (setting the total quantity together), then each firm can earn (higher, or lower) profit than in the Cournot equilibrium. 2. Consider a collusion with two firms. The joint profit is maximized by setting quantity and price together. Each firm sells the agreed amount. However, believing that the other firm sells the agreed amount, there is always a temptation for the firm sell (more, or less) than the agreed amount.

QUESTION 13 Consider a market where two firms (1 and 2) produce differentiated goods and compete in prices. The demand for firm 1 is given by D₁(P₁, P2) = 140 - 2p1 + P2 and demand for firm 2's product is D2 (P1, P2) 140 - 2p2 + P1 Both firms have a constant marginal cost of 20. What is the Nash equilibrium price of firm 1? (Only give a full number; if necessary, round to the lower integer; no dollar sign.)

The Bertrand model of oligopoly reveals that: capacity constraints are not important in determining market performance. perfectly competitive prices can arise in markets with only a few firms. changes in marginal cost do not affect prices. All of the statements associated with this question are true. QUESTION 2 If firms are in Cournot equilibrium: each firm could increase profits by unilaterally increasing output. each firm could increase profits by unilaterally decreasing output. firms could increase profits by jointly increasing output. firms could increase profits by jointly reducing output. OOO

Calculate the Herfindahl index for a duopoly market where each firm has equal market. Calculate the Herfindahl index for a three-firm oligopoly market in which one firm hasa 80% market share and the other firms each have 10% market share. iii. Calculate the Herfindahl index for a 10-firm oligopoly in which each firm has equal     market shares. iv. Which of the above markets is the least competitive?                       Justify your position.

1. Perloff Chapter 14, Exercise 3.13 3.13 A duopoly faces an inverse market demand function of p = 120 - Q. Firm 1 has a constant marginal cost of 20. Firm 2's constant marginal cost is 40. Calculate the output of each firm, market output, and price in (a) a collusive equilibrium or (b) a Nash-Cournot equilibrium. (Hint: See Solved Problem 14.10.) M

In a Cournot duopoly firm 1’s best-response function is downward sloping because when firm 2 produces more: A) Firm 1’s marginal cost goes up, so firm 1 produces less. B) Firm 1's average cost goes up, so firm 1 produces less. C) Firm 1’s marginal revenue goes down, so firm 1 produces less. D) Firm 1’s total cost goes up, so firm 1 produces less.

To advertise or not to advertise Suppose that Creamland and Dairy King are the only two firms that sell ice cream. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises:   Dairy King Advertise Doesn't Advertise Creamland Advertise 10, 10 18, 2 Doesn't Advertise 2, 18 11, 11   For example, the upper right cell shows that if Creamland advertises and Dairy King doesn't advertise, Creamland will make a profit of $18 million, and Dairy King will make a profit of $2 million. Assume this is a simultaneous game and that Creamland and Dairy King are both profit-maximizing firms. If Creamland decides to advertise, it will earn a profit of  _________   million if Dairy King advertises and a profit of ________   million if Dairy King does not advertise.   If Creamland decides not to advertise, it will earn a profit of __________   million if Dairy King advertises and a profit of _________…

Deviating from the collusive outcome  Please check the image there is a graph  Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.60 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and combined quantity of output if Mays and McCovey choose to work together.     When they act as a profit-maximizing cartel, each company will produce      cans $                and charge $        per can. Given this information, each firm earns a daily profit of   $              , so the daily total industry…

solve i and ii please.