A is the correct option
If both the firms are producing equilibrium quantities at the duopoly competition, then it means that both of them are playing their best response given other's production, so if one of the firm decreases its output, it will no longer be its best response output and thus the profit will fall.
Question 30 1 pts Suppose two forms (Firm 1 and Firm 2) are engaged in duopoly...
Suppose two firms (Firm 1 and Firm 2) are engaged in Cournot competition. Both firms are currently producing the Nash equilibrium quantities. If firm 1 were to unilaterally reduce their production by one unit, what would happen to firm 1's profit? Firm 1's profit would decrease Firm 1's profit would increase Firm 1's profit would stay the same There is not enough information to answer this question
Problem 1. Cournot Competition with Two Firms Suppose there are two identical firms engaged in quantity competition (Cournot competition). The demand is P 1 - Qwhere Q qi 2. Assume that firm's i total cost of production is TC(q) = . Compute the Cournot equilibrium (i.e., quantities, price, and profits)
2. (15 pts) Consider a Stackelberg duopoly game of quantity competition in U.S. cigarettes between Philip Morris (PM, biggest brand is Marlboro) and RJ Reynolds (RJR, biggest brand is Camel). Philip Morris is the leader, and Reynolds is the follower. (We will obviously ignore state-minimum pricing and taxes for this question.) Market demand is described by the inverse demand function P 12 0.005Q. Each firm has a constant unit cost of production equal to 2. Prices are in S/pack, and...
Problem 1. Cournot Competition with Two Firms Suppose there are two identical firms engaged in quantity competition (Cournot competition). The demand is P=1-Q where Q =91 +92. Assume that firm's i total cost of production is TC(qi) Compute the Cournot equilibrium (i.e., quantities, price, and profits).
What missing information do you need? That's the question. that's all the question provided us. Suppose two firms are engaged in price competition (also known as Bertrand competition). Neither firm has capacity constraints, and both firms have identical cost structures given by c(y)= 10 + 2y What are the equilibrium profits for each firm? Question 26 pts Suppose two forms are engaged in price competition (also known as Bertrand competition. Neither form has capacity constraints, and both firms have identical...
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition. The demand is P = 1 - Q where Q = qi + q2 + q3. To simplify, assume that the marginal cost of production is zero. Compute the Cournot equilibrium (i.e., quantities, price, and profits)
Problem 2. Cournot Competition with Three Firms Suppose there are three identical firms engaged in quantity competition. The demand is P=1-Q where Q = 91 +92 +93. To simplify, assume that the marginal cost of production is zero. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
Problem 3. Cournot Competition with Different Costs Suppose there are two firms engaged in quantity competition. The demand is P = 2 - Q where Q =q1+q2. Assume ci = 1 and c2 = , i.e., Firm 2 is more efficient. Compute the Cournot equilibrium (i.e., quantities, price, and profits).
Suppose there is a duopoly of two identical firms, A and B, facing a market inverse demand of ?=640−2?, and cost functions of ?? =40?? and ?? =40?? respectively. Find the Cournot-Nash equilibrium and profit for each firm. Suppose that A acts as the leader in a Stackelberg model and B responds. What are the respective quantities and profits of each firm now? Is it advantageous to move first? What are the prices, quantities and profits for the firms if...
Question 31 (3 points) Suppose there are 10 firms operating in an industry. If the second-largest and third-largest firms merged into a single firm, what would we expect to happen? CR4 stays the same, HH increases CR4 decreases, HHI stays the same CR4 and HHI both increase CR4 increases, HHI decreases Question 32 (3 points) In which of the following market structures is long-run profit not zero? Perfect competition Monopolistic competition Bertrand duopoly with identical products Cournot duopoly with identical...