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Problem 1 Firm 1 chooses output level 91 and Firm 2 chooses output level 92. Given...
Consider a Cournot game with 2 firms. Inverse demand function is given by P = 20...
Consider a Cournot game with 2 firms. Inverse demand function is given by P = 20 - (91 +92). The firm has MC=AC=5. Firms choose qi e 0,00) a) Find the Nash equilibrium (9:47). Calculate profits in equilibrium. b) Now suppose that a firm also has to pay a fixed cost of 20 if it produces some output. Write down the cost function of the firm. c) Find the Nash equilibrium (91:97) fixed costs are 20. Calculate equilibrium profits. How...
Consider a Cournot game with 2 firms. Inverse demand function is given by P= 20 –...
Consider a Cournot game with 2 firms. Inverse demand function is given by P= 20 – (91 +92). The firm has MC=AC=5. Firms choose qi € (0,0) a) Find the Nash equilibrium (9*.*). Calculate profits in equilibrium. b) Now suppose that a firm also has to pay a fixed cost of 20 if it produces some output. Write down the cost function of the firm. c) Find the Nash equilibrium (9.97) fixed costs are 20. Calculate equilibrium profits. How does...
There are three firms: firm 1, firm 2 and firm 3. Each firm i chooses the...
There are three firms: firm 1, firm 2 and firm 3. Each firm i chooses the level of production qi. The market price is determined by market demand: p = 24 – 91 - 92 - 43. And the marginal cost of production is zero. (a) Suppose firm 1 moves first, then firm 2 moves and finally firm 3 moves. Each firm can observe the previous firms' production strategies. Find all the subgame perfect equilibria. (b) Suppose firm 1 moves...
Two profit-maximizing firms compete in a market. Firm 1 chooses quantity qı > 0 and Firm...
Two profit-maximizing firms compete in a market. Firm 1 chooses quantity qı > 0 and Firm 2 chooses quantity 42 > 0. The market price is: p(91,92) = 8 - 2q1 - 42. The cost to Firm 1 of producing qi is C1 = 41. The cost to Firm 2 of producing 92 is C2 = 42 + 42. a.) * Calculate the best-response function for each firm. b.) Suppose the two firms choose their quantities simultaneously. What is the...
Problem three Two firms in a homogencous-product duopoly market (firm 1 and firm 2) have the following cost and demand functions: TC 4 TC24q2 and Q-40-P: Q-+2 a Derive the reaction function/best-resp...
Problem three Two firms in a homogencous-product duopoly market (firm 1 and firm 2) have the following cost and demand functions: TC 4 TC24q2 and Q-40-P: Q-+2 a Derive the reaction function/best-response function for each firm. b) Assume that the firms play a simultaneous move game. Characterize the Nash Equilibrium. cSuppose the two firms play game is a sequential game with the following timing of events: 1. Firm 1 chooses output 2. Firm 2 observes firm 1's output and then...
7. Consider an asymmetric Cournot duopoly game, where the two firms have different costs of production....
7. Consider an asymmetric Cournot duopoly game, where the two firms have different costs of production. Firm 1 selects quantity qı at a pro- duction cost of 291. Firm 2 selects quantity 92 and pays the produc- tion cost 492. The market price is given by p = 12 – 91 - 92. Thus, the payoff functions are u(91,92) = (12 – 91 - 92.91 – 291 and uz(9192) = (12 – 91 - 92)92 – 492. Calculate the firms'...
2. (30 pts) There are two firms in a market, producing the same good. The firms...
2. (30 pts) There are two firms in a market, producing the same good. The firms simultaneously choose their output levels, qı for firm 1 and q2 for firm 2. The price adjusts according to the inverse demand function p= 65 – (91 +92). Each firm has a per-unit (average) cost of 5. Each firm's payoff is its profit. a. (5 pts) Find firm l's profit as a function of qı and q2 (profit equals revenue minus total cost). b....
Suppose that the inverse market demand for a commodity is given by P = 240 Q...
Suppose that the inverse market demand for a commodity is given by P = 240 Q The cost curves of the three firms which could serve this market are TC,(a) 30q +300 and TC2() (d) Suppose that firms engage in Stackelberg rather than Cournot competition. Firm 1 moves first by choosin its output level. After Firm 1 has chosen its output level, Firm 2 observes ql and chooses its output leve Find the subgame-perfect Nash equilibrium of the Stackelberg game....
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm face...
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm faces a marginal cost of production of 4 per unit The timing of the game is as follows. In Period 1, firm 1 chooses the quantity q it will sell. In Period 2, firm 2 (who observed firm 1s choice in period 1) chooses whether or not to enter the market. If firm 2 chooses to enter it must pay an entry fee...
Question 2 (60 points) Consider two following Cournot competition between two firms, Firm 1 and Firm...
Question 2 (60 points) Consider two following Cournot competition between two firms, Firm 1 and Firm 2. The firms face an inverse demand function P = 600-Q where Q = 91 + 92 is the total output. Each unit produced costs c-$60. Therefore the profit of each farmer is given by π1 (J1.qz) = (600-91-J2)a1-6091 712 (41,42) (600 q1 q2)42-6092 Each firm. i simultaneusly chooses own qi to maximize own profits πί. a) (15 points) Find the Cournot NE quantities...
Consider a Cournot game with 2 firms. Inverse demand function is given by P = 20 - (91 +92). The firm has MC=AC=5. Firms choose qi e 0,00) a) Find the Nash equilibrium (9:47). Calculate profits in equilibrium. b) Now suppose that a firm also has to pay a fixed cost of 20 if it produces some output. Write down the cost function of the firm. c) Find the Nash equilibrium (91:97) fixed costs are 20. Calculate equilibrium profits. How...
Consider a Cournot game with 2 firms. Inverse demand function is given by P= 20 – (91 +92). The firm has MC=AC=5. Firms choose qi € (0,0) a) Find the Nash equilibrium (9*.*). Calculate profits in equilibrium. b) Now suppose that a firm also has to pay a fixed cost of 20 if it produces some output. Write down the cost function of the firm. c) Find the Nash equilibrium (9.97) fixed costs are 20. Calculate equilibrium profits. How does...
There are three firms: firm 1, firm 2 and firm 3. Each firm i chooses the level of production qi. The market price is determined by market demand: p = 24 – 91 - 92 - 43. And the marginal cost of production is zero. (a) Suppose firm 1 moves first, then firm 2 moves and finally firm 3 moves. Each firm can observe the previous firms' production strategies. Find all the subgame perfect equilibria. (b) Suppose firm 1 moves...
Two profit-maximizing firms compete in a market. Firm 1 chooses quantity qı > 0 and Firm 2 chooses quantity 42 > 0. The market price is: p(91,92) = 8 - 2q1 - 42. The cost to Firm 1 of producing qi is C1 = 41. The cost to Firm 2 of producing 92 is C2 = 42 + 42. a.) * Calculate the best-response function for each firm. b.) Suppose the two firms choose their quantities simultaneously. What is the...
Problem three Two firms in a homogencous-product duopoly market (firm 1 and firm 2) have the following cost and demand functions: TC 4 TC24q2 and Q-40-P: Q-+2 a Derive the reaction function/best-response function for each firm. b) Assume that the firms play a simultaneous move game. Characterize the Nash Equilibrium. cSuppose the two firms play game is a sequential game with the following timing of events: 1. Firm 1 chooses output 2. Firm 2 observes firm 1's output and then...
7. Consider an asymmetric Cournot duopoly game, where the two firms have different costs of production. Firm 1 selects quantity qı at a pro- duction cost of 291. Firm 2 selects quantity 92 and pays the produc- tion cost 492. The market price is given by p = 12 – 91 - 92. Thus, the payoff functions are u(91,92) = (12 – 91 - 92.91 – 291 and uz(9192) = (12 – 91 - 92)92 – 492. Calculate the firms'...
2. (30 pts) There are two firms in a market, producing the same good. The firms simultaneously choose their output levels, qı for firm 1 and q2 for firm 2. The price adjusts according to the inverse demand function p= 65 – (91 +92). Each firm has a per-unit (average) cost of 5. Each firm's payoff is its profit. a. (5 pts) Find firm l's profit as a function of qı and q2 (profit equals revenue minus total cost). b....
Suppose that the inverse market demand for a commodity is given by P = 240 Q The cost curves of the three firms which could serve this market are TC,(a) 30q +300 and TC2() (d) Suppose that firms engage in Stackelberg rather than Cournot competition. Firm 1 moves first by choosin its output level. After Firm 1 has chosen its output level, Firm 2 observes ql and chooses its output leve Find the subgame-perfect Nash equilibrium of the Stackelberg game....
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm faces a marginal cost of production of 4 per unit The timing of the game is as follows. In Period 1, firm 1 chooses the quantity q it will sell. In Period 2, firm 2 (who observed firm 1s choice in period 1) chooses whether or not to enter the market. If firm 2 chooses to enter it must pay an entry fee...
Question 2 (60 points) Consider two following Cournot competition between two firms, Firm 1 and Firm 2. The firms face an inverse demand function P = 600-Q where Q = 91 + 92 is the total output. Each unit produced costs c-$60. Therefore the profit of each farmer is given by π1 (J1.qz) = (600-91-J2)a1-6091 712 (41,42) (600 q1 q2)42-6092 Each firm. i simultaneusly chooses own qi to maximize own profits πί. a) (15 points) Find the Cournot NE quantities...
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