Question C2 The international airplane production market is dominated by two firms: Boeing and Airbus. For...
Airbus Part There are two firms competing in the market for Airplanes – Boeing and Airbus. The market demand is given by Q = 120 – p. Boeing has lower Marginal Costs of production than Airbus. Thus MCB = $20, MCA = $40. Assume that TFC = $0 for both firms. (Think of price being in thousands.) Boeing a) Derive Boeing's residual demand curve, assuming that Airbus produces q^ units. b) What is Boeing's Marginal Revenue? c) Derive Boeing's Reaction...
There are two firms competing in the market for Airplanes -Boeing and Airbus. 4. 120-p. Boeing has lower Marginal Costs of The market demand is given by Q $0 for both production than Airbus. Thus MC"-$20, MCA-$40. Assume that TFC firms. (Think of price being in thousands.) Boeing: Derive Boeing's residual demand curve, assuming that Airbus produces qA units. a. b. What is Boeing's Marginal Revenue? Derive Boeing's Reaction Function c. Airbus: Derive Airbus' residual demand curve, assuming that Boeing...
Lecture notes for reference: 2 Subsidies in Strategic Trade Policy This question asks you to show that the optimal unilateral subsidy in the strategic trade policy setting is always positive. We will take the example of Boeing and Airbus used in lecture, with all the same parameters. 1. The E.U. government's objective is to maximize domestic profits less the cost of the subsidy. Write down the E.U.'s maximization problem as a function of the chosen quantities of Airbus and Boeing,...
Homework 4 1. Consider the Asia-Pacific LNG market, which is dominated by Japan. Suppose that the inverse supply function for this market is given by P 1.Let Japan's marginal factor cost and marginal revenue product functions be as follows: MFC 1 +Q MRP 13- Calculate the quantity of LNG that Japan would purchase (Qm) in this market and the price per unit of LNG (Pm) a. (2 pt) b. Calculate consumer surplus, producer surplus, and social welfare in this market....
In the market of cars, there are two firms operating. The Industry Demand Curve is a function of the outputs being produced by both firms, and is given as: P = 240−(X1+X2), where X1 and X2 are the outputs of Firm 1 and Firm 2 respectively. The Total Cost faced by Firm 1 is TC1 = 20X1 and by Firm 2 is TC2 = 20X2. Each firm maximizes its own profit by choosing its own output, while taking the output...
Suppose two firms compete in Cournot competition. The market inverse demand curve is ? = 200 − ?1 − ?2. Firm 1 and firm 2 face the same marginal cost curve, ?? = 20. Therefore, profit for firm 1 is ?1 = (200 − ?1 − ?2)?2 − 20?1 and similarly for firm 2. a. Solve for the Cournot price, quantity, and profits. b. Suppose firm 1 is thinking about investing in technology that can reduce its costs to $15...
Two firms (Natural Salt and Healthy Salt) compete in the market for Himalayan table salt. Consumers see the salt produced by both firms as perfect substitutes. In this market, each firm chooses what output to produce and price is determined by aggregate output. Market demand is given by ? = 450 − 2?, where ? is kgs and ? is €/kg. The initial marginal cost of Natural Salt is 50€/kg. The respective for Healthy Salt is 40€/kg. A process innovation...
Assume that there are two firms competing in the market for taxi services, Company U and Company G. Company U has a marginal cost MCUB = $6 per trip, and a fixed cost FCUB = $2,500,000; while Company G has a marginal cost MCGC = $12 per trip, and a fixed cost FCGC = $1,500,000. The inverse demand for taxi trips in the market is given by the function: ?=60−?/10,000 In this equation, P is the price of a taxi...
Two firms (Natural Salt and Healthy Salt) compete in the market for Himalayan table salt Consumers see the salt produced by both firms as perfect substitutes. In this market, each firm chooses what output to produce and price is determined by aggregate output. Market demand is given by Q 450-2P, where Q is kgs and P is Ekg. The initial marginal cost of Natural s 506/kg. The respective for Healthy Salt is 40/kg. A process innovation in the production technology...
Subject 2: Oligopolistic Competition (35%) Two firms (Natural Salt and Healthy Salt) compete in the market for Himalayan table salt. Consumers see the salt produced by both firms as perfect substitutes. In this market, each firm chooses what output to produce and price is determined by aggregate output. Market demand is given by Q 450-2P, where Q is kgs and P is €/kg. The initial marginal cost of Natural Salt is 50/kg. The respective for Healthy Salt is 406/kg. A...