The total quantity would be , and the inverse demand curve would be , and the market residual demand would be .
(a) Boeing's residual demand would be .
(b) Boeing's MR would be as or or .
(c) Boeing's RF would be where its MR is equal to the MC, ie or or or .
(d) Airbus's residual demand would be .
(e) Airbus's MR would be as or or .
(f) Airbus's RF would be where its MR is equal to the MC, ie or or or .
(g) The quantities produced by each firm would be where their reaction functions intersect. Solving for the RF's, putting the RF of Airbus in Boeing, we have or or or , and since , we have or . These are the required quantities produced by the firms.
(h) Boeing produces greater quantities than Airbus since Boeing have lower marginal cost than Airbus.
(i) The total quantity sold in the market would be or . At this quantity, the market price would be or or dollars.
(j) The marginal cost of Boeing is or or or , and since fixed cost is zero, we have . The profit of Boeing would be or or dollars.
The marginal cost of Boeing is or or or , and since fixed cost is zero, we have . The profit of Boeing would be or or dollars.
The market profit would be or dollars.
(k) Supposing that the market price is fixed at $35. In that case, Boeing's MR would be , and the optimal output would be where or or . Similarly, Airbus's MR would be , and the optimal output would be where or or . In case the price is not fixed, it would be reestablished to the equilibrium price found before as market price. But, if the price is fixed at $35, then the quantity produced would be and .
The total quantity would be , and the inverse demand curve would be , and the market residual demand would be .
(a) Boeing's residual demand would be .
(b) Boeing's MR would be as or or .
(c) Boeing's RF would be where its MR is equal to the MC, ie or or or .
(d) Airbus's residual demand would be .
(e) Airbus's MR would be as or or .
(f) Airbus's RF would be where its MR is equal to the MC, ie or or or .
(g) The quantities produced by each firm would be where their reaction functions intersect. Solving for the RF's, putting the RF of Airbus in Boeing, we have or or or , and since , we have or . These are the required quantities produced by the firms.
(h) Boeing produces greater quantities than Airbus since Boeing have lower marginal cost than Airbus.
(i) The total quantity sold in the market would be or . At this quantity, the market price would be or or dollars.
(j) The marginal cost of Boeing is or or or , and since fixed cost is zero, we have . The profit of Boeing would be or or dollars.
The marginal cost of Boeing is or or or , and since fixed cost is zero, we have . The profit of Boeing would be or or dollars.
The market profit would be or dollars.
(k) Supposing that the market price is fixed at $35. In that case, Boeing's MR would be , and the optimal output would be where or or . Similarly, Airbus's MR would be , and the optimal output would be where or or . In case the price is not fixed, it would be reestablished to the equilibrium price found before as market price. But, if the price is fixed at $35, then the quantity produced would be and .
There are two firms competing in the market for Airplanes -Boeing and Airbus. 4. 120-p. Boeing...
Airbus Part There are two firms competing in the market for Airplanes – Boeing and Airbus. The market demand is given by Q = 120 – p. Boeing has lower Marginal Costs of production than Airbus. Thus MCB = $20, MCA = $40. Assume that TFC = $0 for both firms. (Think of price being in thousands.) Boeing a) Derive Boeing's residual demand curve, assuming that Airbus produces q^ units. b) What is Boeing's Marginal Revenue? c) Derive Boeing's Reaction...
I only need answers for the Bertrand Nash Equilibrium section. please provide answers with as much details as possible. Thank you Oligopoly There are two firms competing in the market for Airplanes - Boeing and Airbus. The market demand is given by Q = 120 - P. Boeing has lower Marginal Costs of production than Airbus. Thus MCB = $20, MCA = $40. Assume that TFC = $0 for both firms. (Think of price being in thousands.) Boeing a) Derive...
Question C2 The international airplane production market is dominated by two firms: Boeing and Airbus. For the purpose of this question, assume that there are no other airplane man- ufacturers in the world. Suppose also that Boeing is owned entirely by the US while Airbus is owned entirely by the EU. Thus, US social welfare is a function of Boeing's profits and EU social welfare is a function of Airbus's profits. Suppose that both firms produce airplanes for export to...
Suppose that Airbus and Boeing decide to form a cartel. Is it likely that they both stick to an agreement where each of them produces equal quantities in order to maximize total revenue? In other words, does a formation of such a cartel constitute a Nash equilibrium? Explain carefully (hint: try to figure out if there is a profitable deviation for one of the firms while the other sticks to the cartel agreement). 1. In the commercial aircraft business, Boeing...
You are the manager of Airbus and your sole competitor is Boeing. Prospective buyers regard the airplanes produced by the two firms as identical. The inverse market demand curve for this unique product is given by P = 1300 – 2Q where Q = QA+QB. Boeing and Airbus have identical cost functions: C(Qi) = 100Qi, for i = A,B. The two firms make production decisions, and the market price for airplanes depends on the total amount produced by each firm....
Over the past few decades, Boeing’s chief competitor was Airbus. Recently, smaller firms have entered the market. One of these firms is Embraer. Embraer recently had one of the best-selling business jets, the Phenom 300. Though, there are competitors, Boeing has led the market in terms of pricing. 1. What type of market structure is this and what model might we use to analyze it? These companies have the following total cost functions with A = Airbus, E = Embraer...
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...
Two firms figure out that the market inverse demand is P= 81 - Q. Each firm has the cost C(Q)= Q^2. 1. Find the marginal revenue for the individual firms. 2. What is the reaction function for each firm? 3.What is the equilibrium quantity? 4. What is the market price? 5. How much profit does each firm make? 6. In the long-run what do you expect to happen in a market with profits like this? Find the optimal production for...
Assume that there are two firms competing in the market for taxi services, Company U and Company G. Company U has a marginal cost MCUB = $6 per trip, and a fixed cost FCUB = $2,500,000; while Company G has a marginal cost MCGC = $12 per trip, and a fixed cost FCGC = $1,500,000. The inverse demand for taxi trips in the market is given by the function: ?=60−?/10,000 In this equation, P is the price of a taxi...
Consider the case of two firms competing in a market. Each firm has a constant marginal cost equal to $10. The demand function is D(p) = 100 − p (p is the price in cents) Firms are competing by choosing prices simultaneously. When prices are equal, each firm gets exactly one half of the total demand. P must be an integer value. 1. Find all the Nash equilibria of this duopoly game. 2. Calculate each firms profit under any equilibria. 3....