Two firms sell identical products and compete as Cournot (price-setting) competitors in a market with a...
Two firms sell identical products and compete as Cournot (price-setting) competitors in a market with a demand of p = 150 - Q. Each firm has a constant marginal and average cost of $3 per unit of output. Find the quantity each firm will produce and the price in equilibrium.
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Two firms sell identical products and compete as Cournot
(price-setting) competitors in a market with a...
Suppose a market has two firms that sell identical products. These firms face an inverse market...
Suppose a market has two firms that sell identical products. These firms face an inverse market demand function of P=120 – Q. Firm 1 has a constant MC=20. Firm 2’s marginal cost is MC=30. Find the Cournot equilibrium price, quantities, and profits for each firm. If these firms were able to perfectly collude, what would be the monopoly equilibrium?
Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P...
Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P = 120-2Q. The total cost function for each firm is TC1(Q) = 4Q1. The total cost function for firm 2 is TC2(Q) = 2Q2. What is the output of each firm? Find: Q1 = ? Q2 = ?
4. (12 MARKS -6 FOR EACH PART) Two firms produce homogeneous products and compete as Cournot...
4. (12 MARKS -6 FOR EACH PART) Two firms produce homogeneous products and compete as Cournot duopolists. Inverse market demand is given by P 30 Q. Firm 1 has a marginal cost of 5 per unit. Firm 2's marginal cost is c2<5. (a) Suppose that c2 falls. What will happen to the Cournot equilibriumi) price, (ii) consumer surplus and total surplus, and (ii) the HHI? Explain your answer. (b) How does this example relate to criticisms of the use of...
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...
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...
PROBLEM #1 Consider a market with two firms that sell products that are identical. Su market dema...
PROBLEM #1 Consider a market with two firms that sell products that are identical. Su market demand is as follows: P-56-Q , where Q measures the total output produced by both firms (that is, Q=q +q.) and qi and q, are the quantities produced by firm 1 and firm 2, respectively. The per-unit cost of production is $6 for each firm, and so the firm's cost functions are 6q, and 6q, respectively. Each firm seeks to maximize profits. The firms...
Suppose the two firms cannot collude and instead compete in the Cournot Model in the market...
Suppose the two firms cannot collude and instead compete in the Cournot Model in the market described in question 1 (market demand is still Q=18-P) with the same cost (C(Q)=1/2 *Q^2). Set up firm 1’s profit maximization. Solve for firm 1’s best response function. Solve for firm 1’s quantity, firm 2’s quantity, the equilibrium market quantity, and price. Show your work. Is this a Nash equilibrium? Do consumers prefer the Cournot competition equilibrium over the collusion of the two firms...
Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals...
Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals do not change their output based on the output that it produces. Ilustration: A Cournot oligopoly has two firms, YandZ. Yobservesthe market demand curve and the number of units that Z produces. It assumes that Z does notchange its output regardless of the number of units that it (Y) produces, so chooses a production level that maximizes its profits. The general effects of a...
Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q =...
Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q = 18 – P with the cost (c(Q) =*Q). a. Set up firm l's profit maximization. b. Solve for firm l's best response function. c. Solve for firm l's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium?
Suppose there are two firms competing in a market. Both firms produce identical products. Firm One...
Suppose there are two firms competing in a market. Both firms produce identical products. Firm One is an efficient firm and has total cost function C1=5q1; Firm Two is a less efficient firm and has total cost function C2=10q2 . Market demand for this product is given by Q=150-2p. If two firms compete in quantities of production, find out the best response function of each firm and the equilibrium output level of each firm.
8. Consider a market where two firms are Cournot competitors with constant average and marginal costs....
8. Consider a market where two firms are Cournot competitors with constant average and marginal costs. Due to political favoritism, the government decides to levy a per-unit tax on one of the firms, but not the other. Which of the following do you NOT expect to happen in this market? (A) The market share of the taxed firm decreases. (B) The market share of the favored (non-taxed) firm increases. (C) The equilibrium price increases. (D) The equilibrium quantity sold increases.
4. (12 MARKS -6 FOR EACH PART) Two firms produce homogeneous products and compete as Cournot duopolists. Inverse market demand is given by P 30 Q. Firm 1 has a marginal cost of 5 per unit. Firm 2's marginal cost is c2<5. (a) Suppose that c2 falls. What will happen to the Cournot equilibriumi) price, (ii) consumer surplus and total surplus, and (ii) the HHI? Explain your answer. (b) How does this example relate to criticisms of the use of...
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...
PROBLEM #1 Consider a market with two firms that sell products that are identical. Su market demand is as follows: P-56-Q , where Q measures the total output produced by both firms (that is, Q=q +q.) and qi and q, are the quantities produced by firm 1 and firm 2, respectively. The per-unit cost of production is $6 for each firm, and so the firm's cost functions are 6q, and 6q, respectively. Each firm seeks to maximize profits. The firms...
Cournot Oligopoly and Number of Firms In a Cournot oligopoly, each firm assumes that its rivals do not change their output based on the output that it produces. Ilustration: A Cournot oligopoly has two firms, YandZ. Yobservesthe market demand curve and the number of units that Z produces. It assumes that Z does notchange its output regardless of the number of units that it (Y) produces, so chooses a production level that maximizes its profits. The general effects of a...
Suppose two firms cannot collude and compete in the Cournot Model. Market demand is Q = 18 – P with the cost (c(Q) =*Q). a. Set up firm l's profit maximization. b. Solve for firm l's best response function. c. Solve for firm l's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium?
8. Consider a market where two firms are Cournot competitors with constant average and marginal costs. Due to political favoritism, the government decides to levy a per-unit tax on one of the firms, but not the other. Which of the following do you NOT expect to happen in this market? (A) The market share of the taxed firm decreases. (B) The market share of the favored (non-taxed) firm increases. (C) The equilibrium price increases. (D) The equilibrium quantity sold increases.
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