The inverse demand for a homogenous-product Stackelberg duopoly is P = 10-Q where Q=Q1+ Q2. %3D The cost structure for the two firms, respectively, are C(Q1) = 4Q1 and C2(Q2) = 2Q2- %3D %3D Suppose Firm 2 is the leader. What is the equilibrium profit for the leader? O 7.5 O 10.5 O 12.5 O 0.5 O 0.25

The inverse demand for a homogenous-product Stackelberg duopoly is P = 10-Q where Q=Q1+ Q2. %3D The cost structure for the two firms, respectively, are C(Q1) = 4Q1 and C2(Q2) = 2Q2- %3D %3D Suppose Firm 2 is the leader. What is the equilibrium profit for the leader? O 7.5 O 10.5 O 12.5 O 0.5 O 0.25

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Two firms both produce leather boots. The inverse demand equation is given by P = 52-4Q, where P is…

A: Two firms both produce leather boots.Demand equation is given by P = 52 - 4Qwhere P is the price of…

Q: If Bertrand duopolists respectively have marginal costs of 10 (firm 1) and 8 (firm 2), which of the…

A: In Bertrand duopolist, firms produce identical goods and consumers buy the good from the seller with…

Q: Two firms competing on output choice face the following market demand curve P=30-Q where Q=q1+q2 and…

A: Market Demand is P=30-Q where Q=q1+q2 Total Cost functions of the two firms are: TC1=10q1 TC2=20q2

Q: Price equals marginal cost in an oligopoly for a. Bertrand with identical products, but not…

A: Oligopoly:- Oligopoly can be defined as the structure of market where there are small number of…

Q: For any industry initially comprising of three or more firms characterized by symmetric Cournot…

A: Cournot and Stackelberg are the types of firms we can see in a duopoly. A duopoly is a market…

Q: Two Cournot competitors face inverse demand p = 50 - Q, where Q = q1 + q2 is the total output of…

A: Answer: Equilibrium output levels q1 and q2 = 16 and 16

Q: Imagine an N firm oligopoly for "nominally differentiated" goods. That is, each of the N…

A: The aim of this question is to show the equilibrium prices requires consideration of both a closed…

Q: 4) Suppose there are two firms that compete in prices, say firms 1 and 2, but that the firms produce…

A: Given information q1=10-2P1+P2 q2=10-2P2+p1 MC1=2 MC2=3

Q: every firms marginal cost 30, and there is no fixed cost. Consumers only buy from the firm charging…

A: Bertrand Oligopoly refers to the competition in prices among all the firms participating in the…

Q: Consider a two-firm industry producing two differentiated products indexed by i = 1,2. For…

A: We have two firms which are competing over prices with given different demand functions

Q: (Q: 14-3300957] Consider an oligopolistic market with 13 identical firms that choose their…

A: In a market, Lerner index is used to compute the market power of a business or a firm when it…

Q: The following are the respective numbers for the four-firm concentration ratio and Herfindahl index…

A: When several businesses provide products or services that are alike but not the same, we say…

Q: arises when firms act together to reduce output and keep prices high. O Collateral O A cartel O A…

A: A market refers to a system or arrangement where buyers and sellers come together to engage in the…

Q: If two identical firms with marginal cost of 2 and demand curve P=50-4Q compe profit 2 Soloct

Q: Consider two firms that produce identical products in a situation of duopoly. The two firms have the…

A: Cournot competition:- Cournot competition can be explained as an economic framework for…

Q: Figure: Demand 3 Price $20 18 16 14- 12 10 - 8 6 4 2 0 I MC = AC Demand 2 4 6 8 10 12 14 16 18 20…

A: Perfect competition: A firm in the competitive market is a price-taker because it has a large number…

Q: QUESTION 3 An industry consists of three firms with identical costs C(q) = 18q + q 2. Market demand…

A: Given: An Industry Consist of three firms with identical Cost- C(q) = 18q + q2 Market Demand- Q =…

Q: Consider an oligopolistic market with 5 identical firms that choose their profit-maximizing…

A: Price elasticity of demand refers to the responsiveness of the quantity demand due to change in the…

Q: use the following graph which illustrates the cost and demand for a firm competing in a…

A: A monopolistic firm produces at the intersection of MR and MC curves to maximize profit. If a…

Q: Suppose that there are two firms producing a homogenous product and competing in Cournot fashion and…

A: Given, Competing Cournot fashion Two Firms Homogenous Product Market Demand : Q=120-P2 Total Cost :…

Q: Refer to Table 6-1 in Question 21. If both stores follow a dominant strategy annual profit will grow…

A: A dominant strategy is one which a player chooses irrespective of what the others player chooses.

Q: Two firms compete in a market to sell a homogeneous product with inverse demand function P-600-3Q…

A: Step 1:This question refers to analyze the strategic decision making steps and results of two…

Q: Determine the equilibrium price for each firm *

A: Given For firm 1 =q1 =20-p1 +p2TC1 = 10q1and for firm 2 = q2 =20+p1 -p1TC2 = 10q2

Q: Suppose that identical duopoly firms have constant marginal costs of $20 per unit. Firm 1 faces a…

A: In Bertrand duopoly there are two firms competing in prices.

Q: Which of the following is a characteristic of oligopoly? O A single firm selling a unique product. O…

A: In microeconomics, oligopoly represents a form of imperfect market competition which is dominated by…

Q: Suppose that there are two firms producing a homogenous product and competing in Cournot fashion and…

Q: Consider a homogeneous-product Cournot ollgopoly of 3 firms with cost functions TC(a) = 24, Sup-…

A: "Since you have asked multiple parts, we will answer only the first part for you. If you have any…

Q: The distinguishing features of oligopoly are *** O A. a small number of interdependent firms with no…

A: Introduction Oligopoly has some special characteristics found which are not present in other market…

Q: a) Consider 2 firms competing on price choice and facing the following market demand functions: 91 =…

Q: 19.16. Price-matching guarantees.. In some industries firms offer price-matching guarantees (also…

A: Nash equilibrium is a concept in game theory that describes a state where each player in a game…

Q: e. It is sometimes said that competitors in an oligopolistic industry need a price leader to…

A: An oligopoly is a market structure in which a small number of enterprises have a significant amount…

Q: You are given the market demand function Q=2200-1000p, and that each duopoly firm's marginal cost is…

A: Cournot competition is an financial version used to explain an enterprise shape wherein agencies…

Q: Now consider a three-firm Bertrand (pricing competition) model, where the market demand equation is…

A: In the Bertrand model, all firms in the market choose their price simultaneously. If the product is…

Q: Consider two firms with differentiated products, whose demand functions are given by 41 = 2 – 2pı +…

A: Given information Demand function for firm 1 q1=2-2p1+p2 Demand function for Firm 2 q2=2-2p2+p1…

Q: a) Suppose the 2 firms move simultaneously, determine the equilibrium price, output and profit for…

A: An oligopoly market is one that has few large firms which are interdependent selling homogenous as…

Q: b) Now suppose that Pepsi-Cola leaves the market so Coca-Cola remains as a monopolist in this…

A: In a competitive market, the equilibrium condition is given by P=MC

Q: 5. Use the given information, to answer the following questions.. P = 200 - (Q: + Qz) ---- industry…

A: Industry Demand : P=200-(Q1+Q2) TC1=10Q1 TC2=10Q2 a. Deriving Firm 1's reaction function Firm 1's…

Q: Suppose that there are two firms producing a homogenous product and competing in Cournot fashion and…

A: In Cournot duopoly, two firms compete in quantity and maximizes profit by producing at a point where…

Q: You are given the market demand function Q = 2000 – 1000p, and that each duopoly firm's marginal…

A: Given Market demand function: Q=2000-1000p ... (1) The marginal cost function for each…

Q: Suppose that the demand in a particular industry is given by Qd = 100 - 2P. When the market price in…

A: Introduction: Demand is defined as the number of customers that are willing and able to purchase…

Q: Two firms both produce leather boots. The inverse demand equation is given by P = 280 Q, where P is…

A: Inverse demand function, P = 280 – Q Where Q = q1 + q2, q1 is the quantity produced by the first…

Q: Explain all option compulsary......you will not explain all option then I will give you down…

A: According to the information provided in the image, there are two firms, LIZ and DOM, that sell a…

Q: (Figure: Market Demand Curve I) The graph shows the market demand curve. Price (S) 40- 36 32 28 24…

A: A market structure known as a Cournot duopoly with identical products occurs when two enterprises…

Q: lustry demand is given by: p= 200 – q. – q2 where q and q2 are the outputs of Firm 1 and Firm 2…

A: Note: You have uploaded two questions, hence we shall answer the first one for you. If you seek…

Q: Suppose that total demand for refrigerators at the market price is 15,000 units. If the LRAC curve…

A: Market structure is significant because it has an impact on the incentives, opportunities, and…

Q: Firm 1 faces a demand function of q1 = 100– 2p1+p2, where q is Firm l's output, Pi is Firm %3D l's…

A: Under these presumptions, it very well may be shown that the Bertrand (Nash) equilibrium is that…

Question

The inverse demand for a homogenous-product Stackelberg duopoly is P = 10-Q where Q=Q1 + Q2.
The cost structure for the two firms, respectively, are C(Q1) = 4Q1 and C2(Q2) = 2Q2.
Suppose Firm 2 is the leader.
What is the equilibrium profit for the leader?
O 7.5
O 10.5
O 12.5
O 0.5
O 0.25

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

At the profit-maximizing output level y*, where p(y) = 4a - 3by and c(y) = 10 + ay + By then the 4а - а profit-maximizing output level is; y* 3(b + B) Select one: True False Based on the image below, what type of equilibrium may be used to describe Firm 1 and Firm 2 with respect to y*2 and y*1? Y2. Firm 1's "reaction curve" yı = R¡(Y2). Firm 1's "reaction curve" y2 =R2(Y1). y2 y,* = R,(y2") and y2* = R2(y,*) yi Select one: a. Partial Equilibrium O b. General Equilibrium c. Cournot-Nash equilibrium d. Firm's Equilibrium A monopolist has a cost function given by c(y) = y' and faces a demand curve given by P(y) = 120 – y. What is the profit maximizing level of output? Select one: a. None of the above b. 30 Ос. 100 O d. 20
2. Walmart (firm 1) and Amazon (firm 2) are a duopoly in the grocery market. They are faced with an inverse demand of P(Q1, Q2) = 4 – 2(Q1+ Q2) and total costs of TC(Q;) = 2Q?, i = 1, 2. Note that the marginal cost is not constant! 1. Obtain the Cournot equilibrium quantities and profits. 2. Obtain the Stackelberg equilibrium in which Walmart moves first. Compare with the Cournot equilibrium. 3. Obtain the cartel outcome (= shared monopoly). Compare with Stackelberg and Cournot.
Assume there are two firms, firm A and B, engaged in Cournot competition. The industry demand curve is given by P = 60-Q, where Q = QA+QB denotes industry output. Each firm faces a marginal cost of production equal to $30. In equilibrium, what will be the output level of firm A? O O O O 10 20 30 40
H7. For q1=120-2p1-p2 and q2=120-2p2+p1, show that the duopolists have incentives to collude as well as find the -joint profit-maximizing price, output and profit and find each firm’s price, output and profit. What is the optimal defection of each firm, is collusion Nash equilibrium? Show in 2x2 matrix. Is it a prisoner’s dilemma?
These are the cost and revenue curves associated with a monopolistically competitive firm. . P3 P2 P1 U A B MC ATC Q1 MR D Q According to the graph shown, the monopolistically competitive firm will produce: where D = MC and will charge according to MR where MRMC and will charge according to D where MR = MC and will charge according to ATC where D-MC and will charge according to ATC 4
Consider the Cournot duopoly model. Suppose the inverse demand is given by P(Q) = 200 - Q where Q = q1 + q2, and production has no costs. %3! What are the payoffs for each firm? O 200 – q1 and 200 - q2 O (200 – q1 - q2)qı - 91 and (200- q1-92)92- 92 200 – q1 – q2 and 200 – q1 - 92 O (200 – q1 - q2)q1 and (200 - q1- 92)q2 O (200 – q1)qı and (200- q2)q2
5
The graph below shows a duopolistic market. The firms in this market produce and sell identical products. The graph below shows the market demand, a corresponding marginal revenue curve for the product, and an identical marginal cost curve for each firm. Assume both firms have the goal of maximising economic profit. If the two firms were to collude, what would be the total economic profit made by each firm? O O O $24 $6 $16 $8 Price ($) 10 9 8 7 $0 6 5 4 3 2 1 0 0 Insufficient information to determine economic profit of each firm. 1 2 3 4 MR 5 6 7 8 9 MC D 10 Quantity
Suppose there are two firms in an industry and the inverse demand function for the industry is: P = 45 - 20 Assume that the MC functions for the two firms are: MC1 = 15 MC2 = 12 What is the price under Courbet model? O 15 O 24 O 30 O 36 O 21
When comparing two firms operating as a cartel/colluding and two firms competing in Cournot competition, given the firms face the same inverse market demand and marginal cost is the same for both firms in either situation, which of the following is true? а. The total profit is the same in Cournot competition and collusion. O b. Total output is higher in collusion than in Cournot competition and the price is lower in collusion than in Cournot Competition. Ос. The total profit is lower in Cournot competition than in collusion. O d. Total output is lower in collusion than in Cournot competition and the price is higher in collusion than in Cournot Competition.
In monopolistic competition equilibrium with symmetric fırms, firms enter until each firm earns O zero economic profits because price equals average cot. O positive monopoly profits because it sells a differentiated product. O positive economic profits only if it engages in international trade O negative economic profits because of fixed costs.
25