Given the following inverse demand and cost function, answer the
questions below:
a) Suppose barriers to entry exist such that only one firm serves
the market with no threat of entry. What will be the monopoly
price, outcome, and profit?
b) Suppose instead that perfect competition exists in this market.
What will be the competitive price, market quantity Q, and
competitive firm profit?
c) Suppose two firms serve the market with no threat of entry. If
the two firms compete in quantities, what will be the Cournot
price, quantity for each firm, and market quantity, and profit for
each firm?
d) Suppose the same two firms decide to compete on prices, still
with no threat of entry. What will be the Bertrand price, quantity
for each firm, market quantity, and profit for each firm? e)
Suppose that we know have a two period game, in which a leading
firm determines its quantity based on how it expects the follower
firm to respond. Find the Stackelberg price, quantity for each
firm, market quantity, and profit for each firm.
f) Graph the price and market quantity pairs on a graph of demand,
identifying the monopoly, Cournot, Stackelberg, Bertrand, and
perfectly competitive outcomes.
Given the following inverse demand and cost function, answer the questions below: a) Suppose barriers to entry exis...
Cournot vs. Stackelberg Oligopoly Suppose the inverse demand function and the cost functions for two duopolists are given by: P = 100 – (Q1 + Q2) C1(Q1) = 2Q1 C2(Q2) = 2Q2 a. Cournot: Assume two Cournot duopolists. i. What is firm 1’s Quantity and Profit? R1 = (100-Q1-Q2) * Q1 R1 = 100Q1 - Q12 - Q2Q1 MR1 = 100 - 2Q1 - Q2 C1(Q1) = 2Q1 MC1 = 2 MR1 = MC1 ii. What is firm 2’s Quantity...
Reference the following information about the market demand function for questions 1 to 15. These questions are on different types of market structures – monopoly, perfect competition, Cournot oligopoly market, and the Stackelberg oligopoly market. The market demand function is given the following equation: P = 1600 – Q where Q is the industry’s output level. Suppose initially this market is served by a single firm. Let the total cost function of this firm be given the function C(Q) =...
A homogeneous product duopoly faces a market demand function given by p = 300 - 3Q,where Q = q1 + q2. Both firms have constant marginal cost MC = 100. (part 2) 1a. What is the Bertrand equilibrium price and quantity in this market? 1b. Suppose Firm 1 is the Stackelberg leader, what is the equilibrium price in this market if Firm 2 plays the follower in this duopoly market? What is the equilibrium quantity? How much does each firm...
please answer all 10 questions thanks Suppose there are only two firms in the marker, firm A and firm B. They produce identical products. Firm A and firm B have the same constant marginal cost, MCA = MCB = ACA = ACB = 25. The market demand function is given by Q = 400 – 4P. a. If the firms practice under the Bertrand model, what will be the Nash equilibrium market price and output level? b. If these two...
1. Consider a market with inverse demand P(Q) = 100 Q and two firms with cost function C(q) = 20q. (A) Find the Stackelberg equilibrium outputs, price and total profits (with firm 1 as the leader). (B) Compare total profits, consumer surplus and social welfare under Stackelberg and Cournot (just say which is bigger). (C) Are the comparisons intuitively expected? 2. Consider the infinite repetition of the n-firm Bertrand game. Find the set of discount factors for which full collusion...
Suppose that the market demand curve for mineral water is given as ?=100−10? and marginal cost is fixed at $4. Find the equilibrium price and quantity in each type of different market structure. Show your calculation. a) Monopoly, Cournot duopoly, and Stackelberg duopoly b)Bertrand duopoly (MR is fixed at the level of MC). c) Perfect competitive market (MR is fixed at the level of MC).
Suppose that the market demand curve for mineral water is given as ?=100−10? and marginal cost is fixed at $4. Find the equilibrium price and quantity in each type of different market structure. Show your calculation. 1) Monopoly, Cournot duopoly, and Stackelberg duopoly 2)Bertrand duopoly (MR is fixed at the level of MC). 3) Perfect competitive market (MR is fixed at the level of MC).
Oligopoly The inverse demand curve for brimstone is given by p(Y) 116-3Y (with Y total quantity of brimstone, measured in the conventional units) and the cost function for any firm in the industry is given by TC(y)-8y (with y the output of the firm) a. Determine the industry output and price if the brimstone industry were perfectly competitive Suppose that two Cournot firms operated in the market (Firm 1 and Firm 2) Determine the reaction function of Firm 1. Do...
Please show step by step. Two firms compete in a market to sell a homogeneous product with inverse demand function P= 600 - 3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this Information to compare the output levels and profits in settings characterized by Cournot, Stackelberg, Bertrand, and collusive behavior. Instruction: Do not round Intermediate calculations. Round final answers to two decimal places for Cournot values. Cournot output for each firm:...
Suppose that the market demand curve for mineral water is given as Q=100−10P and marginal cost is fixed at $4. Find the equilibrium price and quantity in each type of different market structure. Show your calculation. a) Monopoly b) Cournot duopoly c) Stackelberg duopoly d) Bertrand duopoly (MR is fixed at the level of MC). e) Perfect competitive market (MR is fixed at the level of MC).