Two firms produce the same product in a local market where the demand of product is P = 780−2Q - P is the price of the product and Q is the total amount of product produced by these two firms. Each firm needs to decide the quantity that they are going to produce given the local demand, and the cost of producing one unit is $1.
Write down the normal-form representation of the game.
Two firms produce the same product in a local market where the demand of product is...
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...
Suppose that the (inverse) market demand function for wax paper is P=400-2Q where Q is total industry output. There are only two firms, Firm1 and Firm 2, that produce wax paper. Thus, Q=q1+q2. Each firm has no fixed cost but a constant marginal cost of production equals $40. (a) Suppose that the two firms decide to form a cartel. Calculate the output quantity for Firm 1 (b) Suppose that the two firms decide to form a cartel. Calculate the profit...
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...
please explain all details. Market demand curve for a good produced only by two firms is given by P= 70- 20. Both firms produce with constant and identical marginal cost of 3. 10, that is MC, = MC, = 10. (P,Q.4-42,) in Cournot equilibrium. a) Find b) Find (P,Q,q1,92,,, 2) in Stackelberg equilibrium with Firm 1 acting as the leader. c) Compare your findings with monopoly and competitive equilibria. Market demand curve for a good produced only by two firms...
In a monopolistic competitive market for blood pressure monitor, suppose the market demand function for the monitor is P=160 – 3Q, where P is the price for monitor, Q and the quantity of monitor demanded. Marginal cost of producing it is MC: P = 20 + Q, where P is the price of the monitor and Q is the quantity of the monitor sold. Use the Twice as Steep Rule, form the marginal revenue function. What are the price and...
2. Two firms produce homogeneous products. Market demand is given by Q = 40-P, and each firm faces a marginal cost of production of 4 per unit The timing of the game is as follows. In Period 1, firm 1 chooses the quantity q it will sell. In Period 2, firm 2 (who observed firm 1s choice in period 1) chooses whether or not to enter the market. If firm 2 chooses to enter it must pay an entry fee...
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. (25 points) Suppose there are only two firms producing widgets. The total cost function for each firm is identical and is given by T℃(a = 8h, where gi is the output of firmi A market research company has found that demand for widgets can be described by the inverse demand function P 200 2Q, where Q-q (a) (10 points) A firm's action in the Courot Duopoly game is to choose an output level. Draw each firm's reaction function as...
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...
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...