Consider two companies A and B sharing a market by producing identical goods (or highly substitutable...

Consider two companies A and B sharing a market by producing identical goods (or highly substitutable goods). Company A’s marginal cost is MC=20 and company B’s marginal cost is MC=10. Market demand is known to be P=100-0.001Q. (e) Find collusive level of profit maximizing output for A and B (Under collusion A and B share the same MC=10 and share the market equally). (f) Using a simple game theory method, show that the collusive outcome is not sustainable. Be sure to construct a 2x2 matrix with correct payoffs.

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Rahul Sunny answered 8 months ago

1. Consider two companies A and B sharing a market by producing identical goods (or highly...

1. Consider two companies A and B sharing a market by producing identical goods (or highly substitutable goods). Company A’s marginal cost is MC=20 and company B’s marginal cost is MC=10. Market demand is known to beP=100-0.001Q. (a) Find profit maximizing level of QA and QB under oligopoly setting. (b) Determine the market price. (c) Determine the revenue of company A and B. (d) Determine the profit of company A and B. (e) Find collusive level of profit maximizing output...

1. Consider two companies A and B sharing a market by producing identical goods (or highly...

1. Consider two companies A and B sharing a market by producing identical goods (or highly substitutable goods). Company A’s marginal cost is MC=20 and company B’s marginal cost is MC=10. Market demand is known to be P=100-0.001Q. Find profit maximizing level of QA and QB under oligopoly setting. Determine the market price. Determine the revenue of company A and B. Determine the profit of company A and B. Find collusive level of profit maximizing output for A and B...

Consider two companies A and Bsharing a market by producing identical goods (or highly substitutable goods)....

Consider two companies A and Bsharing a market by producing identical goods (or highly substitutable goods). Company A’s marginal cost is MC=20and company B’s marginal cost is MC=10. Market demand is known to be P=100-0.001Q. Find profit maximizing level of QAand QBunder oligopoly setting. Determine the market price. Determine the revenue of company A and B. Determine the profit of company A and B. Find collusive level of profit maximizing output for A and B(Under collusion A and B share...

Consider a market with two identical firms, Firm A and Firm B. The market demand is...

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...

SCENARIO 3: Consider an industry consisting of two firms producing an identical product. The inverse market...

SCENARIO 3: Consider an industry consisting of two firms producing an identical product. The inverse market demand equation is P = 100 − 2Q. The total cost equations for firms 1 and 2 are TC1 = 4Q1 and TC2 = 4Q2, respectively. Refer to SCENARIO 3. Firm 1 is the Stackelberg leader and firm 2 is the Stackelberg follower. The profit of the Stackelberg follower is: a. $288. b. $432. c. $486. d. $576. e. None of the above.

Consider a ﬁrm producing two goods, good A and good B, by using a ﬁxed amount...

Consider a ﬁrm producing two goods, good A and good B, by using a ﬁxed amount of labor. The production possibilities set of the ﬁrm is given by Y = {(a,b) ∈ R2 + | a2 +4b2 ≤ 16}. Assume the price of A and the price of B are equal to $1. Solve the revenue maximizing level of outputs for the ﬁrm.

2. In the oligopoly market, only two companies A and B produce goods of the same...

2. In the oligopoly market, only two companies A and B produce goods of the same quality. Each company is involved in producing goods. The marginal cost and average cost are the same at 30. When the market demand function is Q=900-10P, answer the following questions - Draw the balance with Bertrand, and describe the process in which Bertrand's balance was drawn. -Draw the profits of each of the two companies in Bertrand's balance.

There are two companies, X and Y, that produce two identical products, A and B. If...

There are two companies, X and Y, that produce two identical products, A and B. If their labor productivity of the respective products is as follows, determine the following advantages: Product A Product B Company X 100 units per labor hour 30 units per labor hour Company Y 40 units per labor hour 60 units per labor hour Who has the absolute advantage in producing A: ______; Who has the absolute advantage in producing B: ______; Who has the comparative...

In a two goods (x and y) world, two districts (A and B) are identical, except...

In a two goods (x and y) world, two districts (A and B) are identical, except the prices of good x (Px) and good y (Py) are higher and lower in district A, respectively. Suppose two identical individuals (i.e. same preferences and income) live in the two districts separately and their optimal choices are interior solutions. Evaluate the following statement: ‘The MRS at the optimal choices of two individuals are the same’. True, false, or uncertain? Explain your answer intuitively...

In a two goods (x and y) world, two districts (A and B) are identical, except...

In a two goods (x and y) world, two districts (A and B) are identical, except the prices of good x (Px) and good y (Py) are higher and lower in district A, respectively. Suppose two identical individuals (i.e. same preferences and income) live in the two districts separately and their optimal choices are interior solutions. Is the statement: “The MRS at the optimal choices of two individuals are the same” true, false, or uncertain? Explain your answer intuitively and...

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Consider two companies A and B sharing a market by producing identical goods (or highly substitutable...

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