In: Economics

- Suppose there are two identical firms A and B facing a market demand P=280-2Q. Both firms have the same average and marginal cost AC=MC=40.

- Assume that firms are Cournot-competitors (in quantity). Find the equilibrium price, quantity and profits.
- Assume that firms are Stackelberg-competitors (in quantity) and Firm A is the leading firm. Find the equilibrium price, quantity and profits.
- What general conclusions can you derive from the answers that you found in (a) & (b)?

c) The stackleberg equilibrium price is less than the cournot equilibrium price. Consequently, the ouput for the leader is higher than that in case of cournot and the total profit of leader although is higher but the followers is lower than that in case of a cournot equilibrium. The leader in stackleberg duopoly earns more than in case of cournot duopoly.

Suppose there are two identical firms A and B facing a market
demand P=100-2Q. Both firms have the same marginal cost MC=4.
Assume that firms are Cournot-competitors (in quantity). Find
the equilibrium price, quantity and profits.
Assume that firms are Stackelberg-competitors (in quantity) and
Firm A is the leading firm. Find the equilibrium price, quantity
and profits.
What general conclusions can you derive from the answers that
you found in (a) & (b)?

In a duopoly market with two identical firms, the market demand
curve is: P=50-2Q And the marginal cost and average cost of each
firm is constant: AC=MC=2 a. Solve for firm 1’s reaction curve and
graph b. Solve for firm 2’s reaction curve and graph c. Solve for
each firm’s Q and P in a cournot equilibrium and show on your graph
i. What is the profit for each firm?

5. In a duopoly market with two identical firms, the market
demand curve is: P=50-2Q And the marginal cost and average cost of
each firm is constant: AC=MC=2 a. Solve for firm 1’s reaction curve
and graph b. Solve for firm 2’s reaction curve and graph c. Solve
for each firm’s Q and P in a cournot equilibrium and show on your
graph i. What is the profit for each firm?
6. Now assume the same market demand curve as...

a.) Two identical firms compete as a Cournot duopoly. The market
demand is P=100-2Q, where Q stands for the combined output of the
two firms, Q=q1 +q2. The marginal cost for each firm is 4. Derive
the best-response functions for these firms expressing what q1 and
q2 should be.
b.) Continuing from the previous question, identify the price
and quantity that will prevail in the Cournot duopoly market
c.) Now suppose two identical firms compete as a Bertrand
duopoly. The...

Consider two identical firms competing as Cournot oligopolists
in a market with demand p(Q)=100-0.5Q. Both firms have total
costs,TC=10q where 10 is the marginal cost of production. ( Here Q
represents total output in the market whereas q represents firm
level output.)
(b) Now assume that the firms collude. They again
play a one-shot game. What is the output that each firm should
produce in order to sustain the collusion? Find the market price,
and profits of each firm. Are...

Consider a market with two firms, facing the demand function: p
= 120 – Q. Firms are producing their output at constant
MC=AC=20.
If the firms are playing this game repetitively for infinite
number of times, find the discount factor that will enable
cooperation given the firms are playing grim trigger strategy.

Consider two identical firms in a Cournot competition. The
market demand is P = a – bQ. TC1 = cq1 =
TC2 = cq2 .
Find the profit function of firm 1.
Maximize the profit function to find the reaction function of
firm 1.
Solve for the Cournot-Nash Equilibrium.
Carefully discuss how the slope of the demand curve affects
outputs and price.

Consider a market with two identical firms, Firm A and Firm B.
The market demand is ? = 20−1/2?, where ? = ?a +?b . The cost conditions are
??a = ??b = 16.
a) Assume this market has a Stackelberg leader, Firm A. Solve
for the quantity, price and profit for each firm. Explain your
calculations.
b) How does this compare to the Cournot-Nash equilibrium
quantity, price and profit? Explain your calculations.
c) Present the Stackelberg and Cournot equilibrium...

Question:Consider a market with the following
demand: P=56?2Q
P=56?2Q
If the market is served by two duopolists with the same cost
structure, no fixed cost but $20 cost per unit, each firm's total
cost is $20Q.
Find each firm's reaction function.
Determine the profit-maximizing output for each seller.
Determine the equilibrium price.
Calculate each firm's profit.
How much total profit is earned in the market?

.Suppose that the market demand curve facing the incumbent firm
is p = 460 -0.5y.The firms total cost curve is c(y) = 100y.The
incumbent firm is threatened by a potential entrant, which faces a
fixed entry cost K in addition to the variable cost. The entrant’s
total cost is therefore c(y) = K + 100y. Find the limit output
yL

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