Suppose two firms face market demand of P=150-Q, where Q=q1+q2. Both firms have the same unit cost of 22. Assume the firms compete a la Firm 1 is the leader and Firm 2 is the follower in this market. 1.What is the follower’s total revenue function?           2.Determine the equilibrium output level for both the leader and the follower.                3.Determine the profits of the leader and the follower.

Let ci be the constant marginal and average cost for firm i (so that firms may have different marginal costs). Suppose demand is given by P=1-Q. Calculate the Nash equilibrium quantities assuming there are two firms in a Cournot market. Also compute market output, market price, firm profits, industry prof- its, consumer surplus, and total welfare. Represent the Nash equilibrium on a best-response function diagram. Show how a reduction in firm 1’s cost would change the equilibrium. Draw a representative isoprofit for firm 1.

Consider an oligopolistic industry with N competing firms. Suppose that these firms have no fixed costs and that they all have the same marginal costs. Each firm must choose what quantity to produce independently of each other, and all firms must choose at the same time. If we decrease the number of firms in this industry (to, for example N−1), the market price Group of answer choices A. increases B. decreases C. remains unchanged D. becomes nil E. none of the above

9. Two firms compete by choosing price. Their demand functions are q1 = 20 – pı + P2 and q2 = 20 – P2 + P1. Marginal costs are zero a) Suppose the two firms set their prices at the same time. Find the resulting NE. What 2 price will each firm charge, how much will it sell, and what will its profit be? b) Suppose Firm 1 sets its price first and then Firm 2 sets its price. What price will each firm charge, how much will it sell, and what will its profit be? c) Suppose there are three ways this game can be played: both firms set price at the same time; firm 1 sets its price first; firm 2 sets its price first. If firm 1 can choose among these options, which would it prefer?

Suppose there are two pharma companies (A and B) vying to develop the first vaccine to cure AIDS. Assume a fixed MC across the two firms MCA = MCB = 4. Assume further that they both face a market demand of P = 12 -0.00004Q and Q=QA +QB. Assume firm B's reaction function is: QB = 125,000 - 0.5QA. Compute for: Firm A's Revenue or RA Firm A's Marginal revenue MR Output for firm A or QA and output for firm B or QB Market Q* and P*

3

Suppose two profit-maximising firms, Firm 1 and Firm 2, produce an identical good. The market demand curve is P = 340 - 40 where Q = q1 + q2. The firms face costs TCi = 20gi for i = 1, 2. a) If both firms are price- setters, find the demand curve for each firm. What are the equilibrium quantity, price and profit for each firm?

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 =…

The firm ACME, Inc. operates in a competitive market because OACME, Inc. is one of a few firms and entry in this market is easy OACME, Inc. can influence the market price and sells a product different from other firms in the market OACME, Inc. is one of many firms selling the same product and, market entry is easy OACME, Inc. is one of many firms selling the same product and, market entry is blocked

7. Jie is a firm manager deciding its sales quantity strategy. His firm is in a market with another competitor, and he is the leader in the sequential game. Collusion is impossible. The market inverse demand function is P = 16 – Q, where Q is the total quantity of q? the production. The cost functions of Jie's firm and the other firm are c(g) and c(q) = q?, respectively. So Jie should set the quantity as С. 4 A. 8 В. 6 D. 2