Question

In: Economics

Three firms produce ethanol and compete in a Cournot oligopoly. Each firm has the same cost...

Three firms produce ethanol and compete in a Cournot oligopoly. Each firm has the same cost function, ??(?) = 1/ 2 ?. Market demand is given by ? = 600 − ?. The quantities produced by the three firms are respectively ?1,?2,?3.

(a) What is firm 1’s optimal quantity as a function of ?2 and ?3?

(b) What is the total quantity produced by all three firms?

Solutions

Expert Solution

ist part answer

2nd part answer is below


Related Solutions

N firms compete in a Cournot oligopoly. Each firm can produce at a constant average and...
N firms compete in a Cournot oligopoly. Each firm can produce at a constant average and marginal cost of AT C = MC = $5. Firms face a market demand demand curve given by Q = 53 − P. Where Q is the market quantity demanded with Q = Q1 + Q2 + .........QN 1. Find each firm’s reaction function taking into account that the firms are identical. 2. Calculate the Cournot-Nash equilibrium. What are the resulting market price and...
Two firms compete with quantities as in Cournot. Each firm has a marginal cost of $12....
Two firms compete with quantities as in Cournot. Each firm has a marginal cost of $12. The industry demand is P=48-2Q. How much output will each firm produce individually?
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. Illustration: A Cournot oligopoly has two firms, Y and Z. Y observes the market demand curve and the number of units that Z produces. It assumes that Z does not change its output regardless of the number of units that it (Y) produces, so chooses a production level that maximizes its profits....
A Cournot oligopoly consists of four firms, each with a marginal cost of production of MC=10....
A Cournot oligopoly consists of four firms, each with a marginal cost of production of MC=10. The market demand curve is given by Q=(100-P)/3 . The four firms are looking to merge into a single firm so they can increase their profit margin by taking advantage of scale economies. Suppose that after the merger, market demand remains the same but the marginal cost of production of the merged firm decreases to MC=4. 26. What is the change in net social...
Two identical firms compete in a Bertrand duopoly. The firms produce identical products at the same...
Two identical firms compete in a Bertrand duopoly. The firms produce identical products at the same constant marginal cost of MC = $10. There are 2000 identical consumers, each with the same reservation price of $30 for a single unit of the product (and $0 for any additional units). Under all of the standard assumptions made for the Bertrand model, the equilibrium prices would be Group of answer choices $10 for both firms $30 for both firms $50 for both...
Two firms in an oligopoly compete as a leader and follower (the standard two-firm Stackelberg model)....
Two firms in an oligopoly compete as a leader and follower (the standard two-firm Stackelberg model). The market demand is represented by the equation: p = 6500 - 25Q. Each firm has constant MC = AC = 500 (with no fixed costs). What will be the follower's profit? (Round answer to nearest whole number
in Cournot Oligopoly, Each firm believes rivals will hold their output constant if it changes its...
in Cournot Oligopoly, Each firm believes rivals will hold their output constant if it changes its output. <- what does it mean by this ? can anyone explain in detail?
In lecture we saw the Cournot competition model for two firms with the same cost function....
In lecture we saw the Cournot competition model for two firms with the same cost function. Now, we are going to consider asymmetric cost functions. Assume that demand for a good is given by p=a−bQd (Qd is quantity demanded), and that there are 2 firms competing in quantities. Both have no fixed costs and a constant marginal cost. Firm 1 has a marginal cost c1, and firm 2 has a marginal cost c2. We have that a>c1>c2. Find the reaction...
Consider two firms, Firm A and Firm B, who compete as duopolists. Each firm produces an...
Consider two firms, Firm A and Firm B, who compete as duopolists. Each firm produces an identical product. The total inverse demand curve for the industry is P=250-QA+QB. Firm A has a total cost curve CAQA=100+QA2. Firm B has a total cost curve CBQB=100+2QB. Suppose for now, only Firm A exists (QB=0). What is the Monopoly equilibrium quantity and price? What is Firm A’s profit? Find the Nash Cournot equilibrium price and output level. What are the firms’ profits? Find...
The market consists of 2 firms. The firms produce the same product. Firm 1 with $1...
The market consists of 2 firms. The firms produce the same product. Firm 1 with $1 per-unit cost (C1(q1)=1q1 ). Firm 2 with $1 per-unit cost (C2(q2)=1q2 ). Firm 1 can set its price to 2 or 3 or 4 $. Firm 2 can set its price to 2 or 3 or 4 $. The industry's demand function is Q= 10 – P (P-price, Q- total quantities). The firms choose their quantities simultaneously. 1a) Find Firm 1 optimal price P1=?...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT