3) Suppose that an industry consists of two firms that produces a homogeneous product. Suppose that...
= Consider an industry consisting of two firms which produce a homogeneous commodity. The industry demand function is Q = 100 – P, where Q is the quantity demanded and P is its price. The total cost functions are given as C1 = 50q1 for firm 1, and C2 = 60qz for firm 2, where Q 91 +92. a. (6 points) Suppose both firms are Cournot duopolists. Find and graph each firm's reaction function. What would be the equilibrium price,...
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:...
1.Consider an industry with only two firms that produce identical products. Each of the firms only incurs a fixed cost of $1000 to produce and marginal cost is 20. The market demand function is as follows: Q=q1+q2=400-P a. Assuming that the firms form a cartel, calculate the profit-maximizing quantity of output, price and profits b. If the firms choose to behave as in the Cournot model, what would be the profit- maximizing quantities of output, price and profits? c. if...
Suppose two firms (Firm 1 and Firm 2) are producing a product. The total demand is: Q = 110 –10P, where Q = Q1 + Q2. Each of the two firms has the cost function TC = 5Q. Based on the information given, calculate the equilibrium P, Q, Q1, Q2, Profit1 and Profit2 under monopoly (collusion), Cournot, and Stackelberg. For the Stackelberg model, assume that Firm 1 is the leader and Firm 2 is the follower. Show all your workings...
In the Stackelberg model we saw in class there were two firms 1 and 2. Suppose that the market demand is p(Q) = 60−Q, where as in class Q is the aggregate quantity. The const function for firm 1 is c1(q1) = 10q1 and the cost function for firm 2 is c2(q2) = q2. Firm 1 is the leader and Firm 2 is the follower. (a) Solve for the follow’s reaction function, and the leader’s maximization problem. (b) Describe the...
Suppose an industry has a duopoly structure. Duopolist 1 has a cost function given by: c1 (y1) = (y1)2 for y1 ≥ 0 . Duopolist 2 has a cost function given by: c2(y2 ) = 12y2 for y2 ≥ 0. Denoting total output produced in the industry by y = (y1 + y2), the inverse demand function for the good produced in the industry is given by: p = 100 – y Find the reaction function of each duopolist. Using...
please answer all 10 questions thanks Suppose there are only two firms in the marker, firm A and firm B. They produce identical products. Firm A and firm B have the same constant marginal cost, MCA = MCB = ACA = ACB = 25. The market demand function is given by Q = 400 – 4P. a. If the firms practice under the Bertrand model, what will be the Nash equilibrium market price and output level? b. If these two...
The answers I filled are wrong. 1 Suppose that two identical firms produce widgets and that they are the only firms in the market. Their costs are given by C1 = 60Q1 and C2 = 60Q2, where Q1 is the output of Firm 1 and Q2 is the output of Firm 2. Price is determined by the following demand curve: P= 900-Q where Q = Q1 +Q2: Find the Cournot-Nash equilibrium. Calculate the profit of each firm at this equilibrium....
Reference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 1600 – Q where Q is the industry’s output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) =...
Oligopoly The inverse demand curve for brimstone is given by p(Y) 116-3Y (with Y total quantity of brimstone, measured in the conventional units) and the cost function for any firm in the industry is given by TC(y)-8y (with y the output of the firm) a. Determine the industry output and price if the brimstone industry were perfectly competitive Suppose that two Cournot firms operated in the market (Firm 1 and Firm 2) Determine the reaction function of Firm 1. Do...