In a Cournot market structure with two firms, firm A's reaction function gives: | ||||||||||||||
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*option 1 is incorrect
optimal quantity for A as a function of quantity for B.
(In Cournot market structure, both firms determine their output simultaneously so reaction function of a firm expresses its optimal quantity as a function of other firm's quantity.)
In a Cournot market structure with two firms, firm A's reaction function gives: optimal quantity for...
[12] Two firms, A and B. operate in a market as Cournot competitors. Each has the following reaction functions A's reaction function B's reaction function - QA = 200 - 20 Qs = 400 - 20 where QA and Q. denote the production levels of A and B, respectively. Accordingly, we would expect firm A to produce _ and firm B to produce_, which coincides with the Cournot Equilibrium. 80,60 60,280 200.0: None of the above [12] Two firms, A...
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 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...
Consider a market with two firms. Suppose that that firm 2 that invests in a new technology that changes it cost structure from firm 1. Market demand is Q = 18 – P, firm 1 faces costs G; (21) = {Q}, and firm 2 has costs, Cz (22) = 3. Consider a Cournot. a. What is firm l's best response function? b. Set up firm 2's profit maximization and solve for firm 2's best response function. c. Find the equilibrium...
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...
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?
3. 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)=Q2). a. Set up firm 1's profit maximization. b. Solve for firm 1's best response function. C. Solve for firm 1's quantity, firm 2's quantity, the equilibrium market quantity, and price. Show your work. d. Is this a Nash equilibrium? e. Do consumers prefer the Cournot...
Demand in a market dominated by two firms (a Cournot duopoly) is determined according to: P = 300 – 4(Q1 + Q2), where P is the market price, Q1 is the quantity demanded by Firm 1, and Q2 is the quantity demanded by Firm 2. The marginal cost and average cost for each firm is constant; AC=MC = $74. The cournot-duopoly equilibrium profit for each firm is
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...
Demand in a market dominated by two firms (a Cournot duopoly) is determined according to: P = 200 – 2(Q1 + Q2), where P is the market price, Q1 is the quantity demanded by Firm 1, and Q2 is the quantity demanded by Firm 2. The marginal cost and average cost for each firm is constant; AC=MC = $75. The cournot-duopoly equilibrium quantity produced by each firm is _____. Hint: Write your answer to two decimal places.