Question

(16 points) Cournot Duopoly. Market demand is p(Q) = 50 – 4Q, where Q = 4+ 42. Firm 1s cost function is C (91) = 0, and firm

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Both the firm will try to maximize their profit and choose quantities simultaneously.

Profit = Revenue - Cost

Ans a) Market demand, PC) - 50 - 49. Firmes cost function, G (01) - 0 Firm 2s cost function Co (Ve) : 10V Iwo firms engage导 : 号 We = 6 - Axs -s - 2 as S , 03::s} | A 1 20zilibsituw, g* * * -5+2 Se 1 P*:0-49 2 SO - 4x1s 20-30 *20 elasticity of

Add a comment
Know the answer?
Add Answer to:
(16 points) Cournot Duopoly. Market demand is p(Q) = 50 – 4Q, where Q = 4+...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q =...

    Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q = 18 – P with the cost (c(Q) =*Q). a. Set up firm l's profit maximization. b. Solve for firm l's best response function. c. Solve for firm l's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium?

  • In Cournot duopoly , the inverse demand function is P=150-Q Firm 1 and Firm costs are...

    In Cournot duopoly , the inverse demand function is P=150-Q Firm 1 and Firm costs are C1=1000+12q1 and C2=2000+6q2 What is the profit maximization , best reaction function to find Nash equilibrium Price

  • 2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's...

    2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's marginal cost is 10, and firm 2's marginal cost is also 10. There are no fixed costs. A. Derive each firm's best response function B. What is the Nash equilibrium of this model? Find the equilibrium market price. C. Find the equilibrium profit for each firm D. Find the equilibrium consumer surplus in this market. 3. (Bertrand Model) Consider a Bertrand duopoly. The market...

  • 3. Cournot Competition (26 points) Consider a Cournot model. The market demand is p=130-41-42. Firm l's...

    3. Cournot Competition (26 points) Consider a Cournot model. The market demand is p=130-41-42. Firm l's marginal cost is 10. and firm 2's marginal cost is also 10. There are no fixed costs. A. (10 points) Derive the best response function for each firm. B. (6 points) Find the Nash Equilibrium.

  • 3. Coumot Competibion (26 points) Consider a Cournot model. The market demand is p-130-q-q Firm l's...

    3. Coumot Competibion (26 points) Consider a Cournot model. The market demand is p-130-q-q Firm l's marginal cost is 10, and fim 2's marginal cost is also 10. There are no fixed costs. A. (10points) Derive the best response function for each firm B. (6 points) Find the Nash Equilibrium. T. (5 points) Find the equilibrium market price and each firm's equilibrium profit. D. (5 points) Find the consumer surplus at the market equilibrium.

  • In a market with a duopoly, if market demand is find the Cournot Reaction curves and...

    In a market with a duopoly, if market demand is find the Cournot Reaction curves and the Cournot quantity solutions then deduce the price in the case where Marginal cost curves for either of the duopoly firms is and . Compare your results to the case where a Monopolist that has a replaces the duopoly. What are the monopoly quantity and price? Which quantities are bigger, Cournot or Monopoly? What is the consumer Surplus in both cases? Set up the...

  • In the market of cournot competition, the aggregate market demand is P 100 4Q a. There...

    In the market of cournot competition, the aggregate market demand is P 100 4Q a. There exists two firms in the market, with identical production technology, i.e. mci = m2-20. Calculate the cournot equilibrium in this case. Also, draw the best response functions for firm 1 and firm 2 in the((2) plane b. There exists two firms in the market, with different production technology, i.e. mci = 10 and m2-30. Calculate the cournot equilibrium in this case. Also, draw the...

  • 7. There are two firms that compete according to Cournot competition. Firm 1 has a cost...

    7. There are two firms that compete according to Cournot competition. Firm 1 has a cost function C1(91) = 2491 +5. Firm 2 has a cost function C(92) = 1022 +10. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 80 - Where total supply Q = 91 +92. (a) Setup the profit maximization problem for firm 1 with all necessary equations plugged in. (2...

  • Consider a cournot model of a duopoly market where Firm X and Firm Y operate. Each...

    Consider a cournot model of a duopoly market where Firm X and Firm Y operate. Each firm has marginal cost equal to $20, and the market demand is Q = 100 - (1/2) P. There are no fixed costs. a) Show the best-response function of each firm. b) Calculate the profit-maximizing output level for each firm. c) What is the equilibrium price? d) Calculate the profit for each firm.

  • Assumptions Market Demand: P = 14- Qrotal Two P = 16- 1 [HD] Groups: P =...

    Assumptions Market Demand: P = 14- Qrotal Two P = 16- 1 [HD] Groups: P = 12- 2(LD] (HD = high demand; LD = low demand] Incumbent/Entrant: P=14-01-ge Duopoly: P = 14 - 119 +22) Marginal Cost: MC = 4 Entrant's Total Cost = 9+4ge Capacity Constraint: 5/firm Cournot Duopoly 1. Take derivative of demand function in terms of qı (dq1/dP). = MR1. 2. Set MR1 = MC. That's Firm l's reaction function. 3. Repeat for Firm 2. 4. Where...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT