Questions 18-19 refer to the following: There 2 firms in a Cournot Oligopoly market for cell phone service in a Texas county. The market inverse demand function and the total cost functions each of the two firms are as follows: P = 50 – 0.25(Q1 + Q2) (market inverse demand) TC1 = 5 + 10Q1 (total cost function for firm 1) TC2 = 2 + 12Q2 (total cost function for firm 2) 18. Which of the following represents the equilibrium market price, and level of output for firm 1 and firm 2?
a. P = $35 Q1 = 42 Q2 = 42
b. P = $24 Q1 = 56 Q2 = 48
c. P = $24 Q1 = 48 Q2 = 56
d. P = $24 Q1 = 52 Q2 = 52
e. P = $28 Q1 = 36 Q2 = 32
In equilibrium, what will the firm 2 profit equal?
a. 2 = $240
b. 2 = $350
c. 2 = $574
d. 2 = $779
e. 2 = $1,152
Questions 18-19 refer to the following: There 2 firms in a Cournot Oligopoly market for cell...
Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P = 120-2Q. The total cost function for each firm is TC1(Q) = 4Q1. The total cost function for firm 2 is TC2(Q) = 2Q2. What is the output of each firm? Find: Q1 = ? Q2 = ?
Let market demand for a Cournot duopoly be represented by P=4500-(2Q1+2Q2), while total costs for firm 1 and 2 are respectively, TC1(Q1)=12Q1 2 and TC2(Q2)=12Q2 2 . Calculate equilibrium output, price, and profit of each firm. 10 pts
Questions 10-12 rely on the following prompt: Firm 1 and Firm 2 compete as Cournot duopolists, producing q1 and q2 units of output respectively, such that market output Q=q1+q2. They face market inverse demand of P = 400 − 2Q. Firm 1’s Total cost is given by TC1=2q1^2. Firm 2’s by TC2=2q2^2. 10. What is Firm 1’s equilibrium profit maximizing output level, q1*? 11. What is market output in the Cournot equilibrium for this market (so, what is the value...
question 2 answer needed. Ql) Consider an oligopoly with 2 firms. The inverse demand curve is given by P- 100- Q1-Q2. Firm 1's total cost function is TC 30Q1. Firm 2's total cost function is TC2 -20Q2. Analyze this using a Cournot model of oligopoly. Find the Nash Equi- librium quantity that each firm produces. Q2) Analyze the demand and cost functions in Question 1 using a Bertrand model of oligopoly where products are identical. Find the Nash equilbrium(a) prices....
Now consider a typical Cournot duopoly situation such that the market is being served by two firms (Firm 1 and Firm 2) that simultaneously decide on the level of output to sell in the market, while producing an identical product. The total output of the industry is Q = q1 + q2, where q1 and q2 are the output of Firm 1 and 2, respectively. Each firm has a symmetric cost function: C(q1) = 12 q1 and C(q2) = 12...
3. Two firms in the market, 1 and 2, face an inverse demand function given by P(Q1 +Q2) = 400 – 2Q1 – 202 where Q1 is the level of production of firm 1 and Q2 is the level of production of firm 2. The cost function of firm 1 is C1 (Q1) = (Q1) and the cost function of firm 2 is C2 (Q2) = (Q1). The two firms compete in quantities (i.e., Cournot competition). (a) Set up the...
Consider two firms (Firm A and Firm B) competing in this market. They simultaneously decide on the price of the product in a typical Bertrand fashion while producing an identical product. Both firms face the same cost function: C(qA) = 12qA and C(qB) = 12qB, where qA is the output of Firm A and qB is the output of Firm B. The demand curve is P = 30 - Q. (i) What will be the Bertrand-Nash equilibrium price (pB) chosen...
of output respectively, suc. Firm 1 and Firm 2 compete as Cournot duopolists, producing q1 and q units that market output Q = q1 + q2. They face market inverse demand of P-400-20. Firm l's Total cost is given by TG, = 2q3. Finn 2's by TC2-2 . 10, what is Firm l's equilibrium profit maximizing output level, qǐ? 11. What is market output in the Cournot equilibrium for this market (so, what is the value of Q. = qi...
In the Stackelberg model we saw in class there were two firms 1 and 2. Suppose that the market demand is p(Q) = 60−Q, where as in class Q is the aggregate quantity. The const function for firm 1 is c1(q1) = 10q1 and the cost function for firm 2 is c2(q2) = q2. Firm 1 is the leader and Firm 2 is the follower. (a) Solve for the follow’s reaction function, and the leader’s maximization problem. (b) Describe the...
The market for widgets consists of two firms that produce identical products. Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms. Firm 2 is known to have a cost advantage over firm 1. A recent study found that the (inverse) market demand curve faced by the two firms...