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Problem 1: Suppose that the market demand function is given by q-80-2p. All firms in the...
Two firms are participating in a Stackelberg duopoly. The demand function in the market is given by Q = 2000 − 2P. Firm 1’s total cost is given by C1(q1) = (q1) 2 and Firm 2’s total cost is given by C2(q2) = 100q2. Firm 1 is the leader and Firm 2 is the follower. (1) Write down the inverse demand function and the maximization problem for Firm 1 given that Firm 2 is expected to produce R2(q1). (2) Compute...
4. Homogenous product Bertrand. Suppose that the demand for marbles is given by Q- 80 - 5P, where Q is measured in bags of marbles. There are two firms that supply the market, and the firms produce identical marbles (i.e., they are homogenous products). Firm 1 has a constant marginal cost of $10.00/bag, while firm 2 has a constant marginal cost of S5.00/bag. The two firms compete in price. In Nash Equilibrium, what prices will the two firms set? How...
Problem 4. Three firms operate in an oligopoly market with inverse demand function given by D(Q)a Q, where Q- 1 42 +q3 and q, represents the quantity produced by firm i. Each firm has constant marginal cost of production c and no fixed cost, assume that 0<c<a. The firms compete in the market by choosing quantities in the following way. Firm 1, the industry leader, chooses gi20. Firms 2 and 3 both observe qi. Firm 2 then chooses q2 2...
1. Consider a three firm (n = 3) Cournot oligopoly. The market inverse demand function is p (Q) = 24 Q. Firm 1 has constant average and marginal costs of $12 per unit, while firms 2 and 3 have constant average and marginal costs of $15 per unit. a)Verify that the following are Nash equilibrium quantities for this market: q1 = 9 / 2 and q2 = q3 = 3 / 2 . b)How much profit does each firm earn...
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...
pls answer as many qwuestions!! 1. A market has an inverse demand curve and four firms, each of which has a constant marginal cost of. If the firms form a profit-maximizing cartel and agree to operate subject to the constraint that each firm will produce the same output level, how much does each firm produce? 2. Duopoly quantity-setting firms face the market demand curve. Each firm has a marginal cost of $60 per unit. a. What is the Nash-Cournot equilibrium?...
Suppose that demand in a given market is given by P = 439 - Q and marginal costs are constant, with MC = 147. Assume that fixed costs are zero (so ATC also are constant at 147). If there are only two firms in the market, one can construct a matrix as shown below representing the payoffs to strategies: Firm 2 Collude (92=73) Compete (92=97) Collude (qı=73) 10658, 10658 8906, 11834 Firm 1 Compete (qi=97) 11834, 8906 9506, 9506 a.)...
Please be descriptive. The market demand curve in a commodity chemical industry is given by Q 600 - 3P, where Q is the quantity demanded per month and P is the market price in dollars. Firms in this industry supply quantities every month, and the resulting market price occurs at the point at which the quantity demanded equals the total quantity supplied. Suppose there are two firms in this industry, Firm 1 and Firm 2. Each firm has an identical...
There are only two firms in the widget industry. The total demand for widgets is Q 5 30-2P. The two firms have identical cost functions, TC 5 3 + 10Q. The two firms agree to collude and act as though the industry were a monopoly. At what price and quantity will this cartel maximize its profit?
Scenario: Two identical firms make up an industry (duopoly) in which the market demand curve is represented by Qd=5,000-4P, and the marginal cost (MC) is constant and equal to $650. Suppose the two firms decide to cooperate and collude; resulting in the same amount of production for each firm. What is the profit-maximizing price and output for the industry? Price = $300; Q= 2,000 units Price = $400, Q= 5,000 units Price = $950; Q= 1,200 units Price = $600,...