ZuoTi.Pro
Question

5. Cournot Competition Consider a Coumot duopoly model. Suppose that market demand is P-a-qi Also suppose that the cost funct
math   Statistics-And-Probability   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Answer. P-a-ql-q2 Date: ----9/5/2019 a) Profit function for firm I: (a ql- q2)q1 q12 For the first order condition differenti

Put the value of q2 in qlwe get, q2 (a ql)/4 q2 = (a-((a-q2)/4))/4 q2 a/5 Put the value in ql (a q2)/4 Profit of firm 1: 3a/5

a = 4Q Q a/4 2_.2 Thus the total profit earned by two firms (4a2/25) is less than the profit of monopoly (a2/8)

0 0
Add a comment
Know the answer?
Add Answer to:
5. Cournot Competition Consider a Coumot duopoly model. Suppose that market demand is P-a-qi Also suppose that the cost functions of the two firms are TG (q) = q, and T( (a) Write the profit func...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 3. There are two firms that compete according to Cournot competition. Firm 1 has a cost...

    3. There are two firms that compete according to Cournot competition. Firm 1 has a cost function G(91) = 5.59+12. Firm 2 has a cost function C(q2) = 2.5q3 + 18. These firms cannot discriminate, so there is just one price that is determined by the aggregate demand. The inverse demand equation is P(Q) = 600 – 0 Where total supply Q-q1+92. (e) Use your best response equations to mathematically solve for the equilibrium quantities qi 9, Q". equilibrium price...

  • 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 = ?

  • 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...

  • Consider a market with two firms in Cournot (quantity) competition. Market demand is given by q(p)...

    Consider a market with two firms in Cournot (quantity) competition. Market demand is given by q(p) = a − p. Each firm faces a constant marginal cost of c. a. (15 points) Suppose that the government imposes a unit tax of δ, so that if a firm sells q units of the good, that firm owes q · δ to the government. Find the equilibrium quantity, price paid by consumers, consumer surplus, and tax revenue. Your answers should be functions...

  • Question 2 (60 points) Consider two following Cournot competition between two firms, Firm 1 and Firm...

    Question 2 (60 points) Consider two following Cournot competition between two firms, Firm 1 and Firm 2. The firms face an inverse demand function P = 600-Q where Q = 91 + 92 is the total output. Each unit produced costs c-$60. Therefore the profit of each farmer is given by π1 (J1.qz) = (600-91-J2)a1-6091 712 (41,42) (600 q1 q2)42-6092 Each firm. i simultaneusly chooses own qi to maximize own profits πί. a) (15 points) Find the Cournot NE quantities...

  • 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?

  • Question 5 Demand in a market dominated by two firms (a Cournot duopoly) is determined according...

    Question 5 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 = $60. The cournot-duopoly equilibrium profit for each firm is _____. Hint: Write your answer to two decimal places. QUESTION 6...

  • Demand in a market dominated by two firms (a Cournot duopoly) is determined according to: P...

    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

  • 2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's...

    2. (Cournot Model) Consider a Cournot duopoly. The market demand is p=160 - q2. Firm 1's marginal cost is 10, and firm 2's marginal cost is also 10. There are no fixed costs. A. Derive each firm's best response function B. What is the Nash equilibrium of this model? Find the equilibrium market price. C. Find the equilibrium profit for each firm D. Find the equilibrium consumer surplus in this market. 3. (Bertrand Model) Consider a Bertrand duopoly. The market...

  • 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...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT