3. Cournot competition: The inverse demand for a homogeneous good is given by p(Q) = 100...
[Cournot competition with N firms] There are three identical firms in the industry. The inverse demand function is p(Q-1-Q, where Q = q1 +92+93 denotes aggregate output. To facilitate your calculations, assume that the marginal cost for all firms is zero, c 0· 2. (a) Find the best response function for each firm. Interpret b) Compute the Cournot equilibrium. (c) Assume that two of the three firms merge (transforming the industry into a duopoly). Show that the profit of the...
Problem 1. Cournot Competition with Two Firms Suppose there are two identical firms engaged in quantity competition (Cournot competition). The demand is P=1-Q where Q =91 +92. Assume that firm's i total cost of production is TC(qi) Compute the Cournot equilibrium (i.e., quantities, price, and profits).
Consider a homogeneous-product Cournot oligopoly with four firms. Suppose that the inverse demand function is P(Q) = 64 – Q. Suppose that firms incur a constant marginal cost c = 4. Characterize the equilibrium of the game in which all firms simultaneously choose quantity. Suppose that firms 1 and 2 consider merging and that there are synergies leading to marginal costs cm < c. Characterize the new market equilibrium. At what level of cm are the two firms indifferent whether...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition. The demand is P=1-Q where Q = 91 +92 +93. To simplify, assume that the marginal cost of production is zero. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
) TUU 100 2. The inverse market demand in a homogeneous-product Cournot duopoly is P=20 30 +) and costs are C(q) = 26Q, and C2(Q) = 32Q2. (LOI, LO3) a. Determine the reaction function for each firm. b. Calculate each firm's equilibrium output. c. Calculate the equilibrium market price. d. Calculate the profit each firm earns in equilibrium. .
EC202-5-FY 10 9Answer both parts of this question. (a) Firm A and Firm B produce a homogenous good and are Cournot duopolists. The firms face an inverse market demand curve given by P 10-Q. where P is the market price and Q is the market quantity demanded. The marginal and average cost of each firm is 4 i. 10 marks] Show that if the firms compete as Cournot duopolists that the total in- dustry output is 4 and that if...
Part 1 Consider a market with a demand curve given (in inverse form) by P(Q) = 80 – 0.25Q, where Q is total market output and P is the price of the good. Two firms compete in this market by simultaneously choosing quantities q1 and q2 (where q1 + q2 = Q). This is an example of Choose one: A. Stackelberg competition. B. Cournot competition. C. Bertrand competition. D. perfect competition.Part 2 Now suppose the cost of production is constant at $50.00 per unit (and is the same...
Consider a market with two firms in Cournot (quantity) competition. Market demand is given by q(p) = a − p. Each firm faces a constant marginal cost of c. a. (15 points) Suppose that the government imposes a unit tax of δ, so that if a firm sells q units of the good, that firm owes q · δ to the government. Find the equilibrium quantity, price paid by consumers, consumer surplus, and tax revenue. Your answers should be functions...
3. Two firms that are engaged in Stackelberg competition face the market inverse demand curve P-100-2Q, where Q is the total 22-0.Sqy, what is Firm 1's (the first-mover's) nverse demand une output, q2. Each firm produces the product at a constant marginal cost of $22. If Firm 2's reaction function is P 56-4 OP=100-2(92-22 + 0.050;) OP=88-1.541 P 88-24
(16 points) Cournot Duopoly. Market demand is p(Q) = 50 – 4Q, where Q = 4+ 42. Firm 1's cost function is C (91) = 0, and firm 2 has a cost function C2(92) = 1092- The two firms engage in Cournot competition; they simultaneously choose a quantity and the price adjusts so that the market clears. (a) Formally write firm 1's profit maximization problem (b) Find firm l's best response function. (c) Take as given that firm 2's best...