Question

I need step by step solution to the following this question asap .I have limited time so please do it quickly with detailed explanation

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Consider a market with 2 firms where the inverse demand function is given by p=56–24 , where q=9z+q2 . Each firm has a cost function given by c(qi)=8qi , where i={1,2}. a) Compare price level, quantities and profits in this market calculating the Cournot equilibrium and the Stackelberg equilibrium. Draw a graph with best response functions and illustrate the Cournot and Stackelberg solutions in the graph. (15p) b) Compare your results regarding price level, quantities and profits in a) to the result under perfect competition and collusion (monopoly) respectively and illustrate these solutions in your graph. (10p)

Answer 1

148 - 29 48 +2 = 1 8 a) cournot. P=56-29 = 56-29, - 292. T1 = P, q, -aq, = 569, -2q, ² – 29, 22-89 1 = 86-49, -29 -850 19,=48-29 200 Que to sgunmaticity ( 72 = 48 22 J a n Solony 0 40 q, = 48-7 { 8 12 24q, 2,=48%=8=% , brice: 58-2 (16) = 58-32=24 Plates 24.8) 8 & 16X82128 In Stackbakeng soins is a leader fisso q,-29, ²-29, ( u8rg, ) -89 Sri SG-4q, -24 + 2q 1820 dai - 21:00 & 12 492 = 24 26 Drie asb-2 (1246) = 56-2118)= 20 T = (20-8)925144 T2=(208) 6=72 b) In case of Perfect competition, p=me 58-28 -8 29= 48 9=24] 4 P = 56-91247-8 Profis to Under momenty & 40=u8 10=6] 4 konsol Price = 57-216) Monopoly -12 =461 36 10 Profe - (44- 86 - 3646-216 6 14 24 28