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Question 2 (20 pts) In an industry there are N firms producing a homogeneous product. Let...
Consider an industry with N identical firms producing a homogeneous product and competing in quantities. The...
Consider an industry with N identical firms producing a homogeneous product and competing in quantities. The demand function is given by Q = α − P and each firm has constant marginal cost c. Two of the firms are planning to merge. If this merger occurs, the industry would then consist of N – 1 identical firms. Would such a merger occur? Comment more generally on the incentives for merger in oligopoly.
3) Suppose that an industry consists of two firms that produces a homogeneous product. Suppose that...
3) Suppose that an industry consists of two firms that produces a homogeneous product. Suppose that each firm decides how much to produce and assumes that its rival will not alter its level of production in response (Cournot Model). The industry demand equation is: P 145 5(Q1+ Q2) where Qland Q2 represents the output of Firm 1 and Firm 2, respectively. The total cost equations of the two firms are: TCF 3Q1 and TCF 5Q2 A, Calculate each firm's Best...
Consider a market where N firms produce a homogeneous product and compete by simultaneously setting quantities....
Consider a market where N firms produce a homogeneous product and compete by simultaneously setting quantities. The inverse demand function has the general form P PO-P(qi +q2 +q3 + + qv), where Q is total quantity produced, qi is the quantity produced by firm i and P is the market price. The demand curve is downward sloping, so P10 < 0. The total cost of firm i is given by Cig). (0) Show that P- MC qi i , where...
[Cournot competition with N firms] There are three identical firms in the industry. The inverse demand...
[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...
ECON M?C There are two firms in an industry. The industry demand curve is given by...
ECON M?C
There are two firms in an industry. The industry demand curve is given by p = 60 - q. Each firm has one manufacturing plant and each firm i has a cost function C(q) = 97, where qi is the output of firm i. The two firms form a cartel and arrange to split total industry profits equally. Under this cartel arrangement, they will maximize joint profits if Select one: O a. each firm produces 15 units in...
Please show step by step. Two firms compete in a market to sell a homogeneous product...
Please show step by step.
Two firms compete in a market to sell a homogeneous product with inverse demand function P= 600 - 3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this Information to compare the output levels and profits in settings characterized by Cournot, Stackelberg, Bertrand, and collusive behavior. Instruction: Do not round Intermediate calculations. Round final answers to two decimal places for Cournot values. Cournot output for each firm:...
Question 2: Simultaneous quantity choiceTwo firms F1 and F2 produce a homogeneous product and compete on...
Question 2: Simultaneous quantity choiceTwo firms F1 and F2 produce a homogeneous product and compete on the same market. The market price is described by the inverse demand curveP= 11−2Q, where Q is total industry output andPis the market price. To keep things simple, suppose that each firm can produce either 1 or 2 units (these are the only possible choices of production).Further suppose that both firms have a constant marginal cost equal to 2, so that the total cost...
5. Prove that when the production function is homogeneous of degree one, it may be as...
5. Prove that when the production function is homogeneous of degree one, it may be as f(x) 2MP(x)x where MPi(x) is the marginal product of input i. Hint use Euler's Theorem. 6. Derive the cost function for the linear technology y f(xix2)-axi+bx 7. Given the production function fxi)aIxa In(x), derive the firm's supply function assuming an interior solution, assuming that a>0 and a 0. 8. Consider a duopoly facing an industry demand function, p-a-bQ, where Q tg respective cost functions...
5. (20 points) Consider there are four homogeneous firms with cost function C(a) = are considering...
5. (20 points) Consider there are four homogeneous firms with cost function C(a) = are considering whether to enter a market with demand P = 9-Q They 5q + 4 (a) Find two industry supply curves when there are one firm entered the market and two firms entered the market. (b) Draw the curves you found in (a) on a demand-supply diagram and mark these aggregate supply quantity (c) Should the third firm enter the market? Why or why not?...
3. There are two firms that compete according to Cournot competition. Firm 1 has a cost...
3. There are two firms that compete according to Cournot competition. Firm 1 has a cost function G(91) = 5.59+12. Firm 2 has a cost function C(q2) = 2.5q3 + 18. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 600 – 0 Where total supply Q-q1+92. (e) Use your best response equations to mathematically solve for the equilibrium quantities qi 9, Q". equilibrium price...
3) Suppose that an industry consists of two firms that produces a homogeneous product. Suppose that each firm decides how much to produce and assumes that its rival will not alter its level of production in response (Cournot Model). The industry demand equation is: P 145 5(Q1+ Q2) where Qland Q2 represents the output of Firm 1 and Firm 2, respectively. The total cost equations of the two firms are: TCF 3Q1 and TCF 5Q2 A, Calculate each firm's Best...
Consider a market where N firms produce a homogeneous product and compete by simultaneously setting quantities. The inverse demand function has the general form P PO-P(qi +q2 +q3 + + qv), where Q is total quantity produced, qi is the quantity produced by firm i and P is the market price. The demand curve is downward sloping, so P10 < 0. The total cost of firm i is given by Cig). (0) Show that P- MC qi i , where...
[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...
ECON M?C
There are two firms in an industry. The industry demand curve is given by p = 60 - q. Each firm has one manufacturing plant and each firm i has a cost function C(q) = 97, where qi is the output of firm i. The two firms form a cartel and arrange to split total industry profits equally. Under this cartel arrangement, they will maximize joint profits if Select one: O a. each firm produces 15 units in...
Please show step by step.
Two firms compete in a market to sell a homogeneous product with inverse demand function P= 600 - 3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this Information to compare the output levels and profits in settings characterized by Cournot, Stackelberg, Bertrand, and collusive behavior. Instruction: Do not round Intermediate calculations. Round final answers to two decimal places for Cournot values. Cournot output for each firm:...
5. Prove that when the production function is homogeneous of degree one, it may be as f(x) 2MP(x)x where MPi(x) is the marginal product of input i. Hint use Euler's Theorem. 6. Derive the cost function for the linear technology y f(xix2)-axi+bx 7. Given the production function fxi)aIxa In(x), derive the firm's supply function assuming an interior solution, assuming that a>0 and a 0. 8. Consider a duopoly facing an industry demand function, p-a-bQ, where Q tg respective cost functions...
5. (20 points) Consider there are four homogeneous firms with cost function C(a) = are considering whether to enter a market with demand P = 9-Q They 5q + 4 (a) Find two industry supply curves when there are one firm entered the market and two firms entered the market. (b) Draw the curves you found in (a) on a demand-supply diagram and mark these aggregate supply quantity (c) Should the third firm enter the market? Why or why not?...
3. There are two firms that compete according to Cournot competition. Firm 1 has a cost function G(91) = 5.59+12. Firm 2 has a cost function C(q2) = 2.5q3 + 18. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 600 – 0 Where total supply Q-q1+92. (e) Use your best response equations to mathematically solve for the equilibrium quantities qi 9, Q". equilibrium price...
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