Homework Answers
13) ans is B
bedtrand competition is the price competition where firms simultaneously takes decision regarding price in order to maximise profit
14) In Bertrand competition, P=MC=20
Thus Price=20 and Qd=50-20=30
ans is C
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13. In a Bertrand oligopoly a) each firm chooses simultaneously and non-cooperatively how much to b)...
Two duopoly firms each have a cost function: TC(Q) 60Q Market Inverse Demand is: Pp (Q)824 0.6Q After the duopolist...
Two duopoly firms each have a cost function: TC(Q) 60Q Market Inverse Demand is: Pp (Q)824 0.6Q After the duopolists meet secretly and agree to evenly split the profit-maximizing output, Firm 1 decides to break the monopoly-splitting agreement and change its output to maximize its own profit. What will be the net loss of profit for the two firms to the nearest dollar?
Two duopoly firms each have a cost function: TC(Q) 60Q Market Inverse Demand is: Pp (Q)824 0.6Q...
Two duopoly firms each have a cost function: TC (Q) 600 Market Inverse Demand is: Po (Q)-824 0.6Q After the duopoli...
Two duopoly firms each have a cost function: TC (Q) 600 Market Inverse Demand is: Po (Q)-824 0.6Q After the duopolists meet secretly and agree to evenly split the profit-maximizing output, Firm 1 decides to break the monopoly-splitting agreement and change its output to maximize its own profit. What will be the reduction in price for both firms to the nearest dollar? (Subtract the new price from the monopoly price]
Two duopoly firms each have a cost function: TC (Q)...
Consider two firms (Firm A and Firm B) competing in this market. They simultaneously decide on...
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...
Problem 4. Three firms operate in an oligopoly market with inverse demand function given by D(Q)a...
Problem 4. Three firms operate in an oligopoly market with inverse demand function given by D(Q)a Q, where Q- 1 42 +q3 and q, represents the quantity produced by firm i. Each firm has constant marginal cost of production c and no fixed cost, assume that 0<c<a. The firms compete in the market by choosing quantities in the following way. Firm 1, the industry leader, chooses gi20. Firms 2 and 3 both observe qi. Firm 2 then chooses q2 2...
15.2 where a, b > 0 a. Suppose that firms' marginal and average costs are constant...
15.2 where a, b > 0 a. Suppose that firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a - bQ. Calculate the profit-maximizing price-quantity combination for a monopolist. Also calculate the monopolist's profit. b. Calculate the Nash equilibrium quantities for Cournot duopolists, which choose quantities for their identical products simultaneously. Also compute market output, market price, and firm and industry profits. c. Calculate the Nash equilibrium prices...
Exercise 5: Two firms compete in a centralized market by choosing quantity produced (91,92) simultaneously. Aggregate p...
Exercise 5: Two firms compete in a centralized market by choosing quantity produced (91,92) simultaneously. Aggregate production determines price, according to the following inverse demand function: p = [85 - 2 (91 +92)]. Firm l's total costs of production) are TC = 541. Firm 2's total costs are TC2 = 1592 a. Graph the combination of quantities (91,92) that yield the following profits: 11 (91.42) = T12 (91,92) = 450 ; 11 (41,42) = 500 ; 200; 12 (91,92) =...
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...
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...
4. A Consider Cournot model of oligopoly where each firm simultaneously makes a quantity decision. Let...
4. A Consider Cournot model of oligopoly where each firm simultaneously makes a quantity decision. Let yi and y2 denote the quantities 1 and 2, respectively. Let P(Y) = 100-Y be the market-clearing price when the aggregate quantity on the market is Y y1 +y2. Assume that the cost function of firm 1 and firm 2 are as follows. C1(n)-60y1 and C2(2) 60y2. (a) Write down the profit function of firm 1 and firm 2. (of a homogeneous product) produced...
1) In Cournot equilibrium each firm chooses the quantity that maximizes its own profits assuming that...
1) In Cournot equilibrium each firm chooses the quantity that maximizes its own profits assuming that the firm’s rival will continue to sell at the same price as before.In Cournot equilibrium each firm chooses the quantity that maximizes its own profits assuming that the firm’s rival will continue to sell at the same price as before. Q: Why it is false? 2) Suppose that the demand curve for an industry’s output is a downward-sloping straight line and there is constant...
Two duopoly firms each have a cost function: TC(Q) 60Q Market Inverse Demand is: Pp (Q)824 0.6Q After the duopolists meet secretly and agree to evenly split the profit-maximizing output, Firm 1 decides to break the monopoly-splitting agreement and change its output to maximize its own profit. What will be the net loss of profit for the two firms to the nearest dollar?
Two duopoly firms each have a cost function: TC(Q) 60Q Market Inverse Demand is: Pp (Q)824 0.6Q...
Two duopoly firms each have a cost function: TC (Q) 600 Market Inverse Demand is: Po (Q)-824 0.6Q After the duopolists meet secretly and agree to evenly split the profit-maximizing output, Firm 1 decides to break the monopoly-splitting agreement and change its output to maximize its own profit. What will be the reduction in price for both firms to the nearest dollar? (Subtract the new price from the monopoly price]
Two duopoly firms each have a cost function: TC (Q)...
Problem 4. Three firms operate in an oligopoly market with inverse demand function given by D(Q)a Q, where Q- 1 42 +q3 and q, represents the quantity produced by firm i. Each firm has constant marginal cost of production c and no fixed cost, assume that 0<c<a. The firms compete in the market by choosing quantities in the following way. Firm 1, the industry leader, chooses gi20. Firms 2 and 3 both observe qi. Firm 2 then chooses q2 2...
15.2 where a, b > 0 a. Suppose that firms' marginal and average costs are constant and equal to c and that inverse market demand is given by P = a - bQ. Calculate the profit-maximizing price-quantity combination for a monopolist. Also calculate the monopolist's profit. b. Calculate the Nash equilibrium quantities for Cournot duopolists, which choose quantities for their identical products simultaneously. Also compute market output, market price, and firm and industry profits. c. Calculate the Nash equilibrium prices...
Exercise 5: Two firms compete in a centralized market by choosing quantity produced (91,92) simultaneously. Aggregate production determines price, according to the following inverse demand function: p = [85 - 2 (91 +92)]. Firm l's total costs of production) are TC = 541. Firm 2's total costs are TC2 = 1592 a. Graph the combination of quantities (91,92) that yield the following profits: 11 (91.42) = T12 (91,92) = 450 ; 11 (41,42) = 500 ; 200; 12 (91,92) =...
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...
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...
4. A Consider Cournot model of oligopoly where each firm simultaneously makes a quantity decision. Let yi and y2 denote the quantities 1 and 2, respectively. Let P(Y) = 100-Y be the market-clearing price when the aggregate quantity on the market is Y y1 +y2. Assume that the cost function of firm 1 and firm 2 are as follows. C1(n)-60y1 and C2(2) 60y2. (a) Write down the profit function of firm 1 and firm 2. (of a homogeneous product) produced...
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