Question
In: Economics
The market for cucumbers faces a market demand function given by P = 2000 - 100Q(farm...
The market for cucumbers faces a market demand function given by P = 2000 - 100Q(farm ) - 100Q(town). Only two firms exist in this market: Farm's farm and Town farms.
Both firms have a constant marginal cost MC = 1000.
a) Get the reaction function for both farms.
b) Illustrate both reactions functions.
c) Identify the equilibrium
d) What if they began the process of competition with
farms farm choosing to produce 1 unit. Do two steps of
reaction.
e) Will total output be higher than monopolist output?
What about price? How does competition impact firms behaviours? Is
it welfare maximizing for society?
Solutions
Rahul Sunny answered 8 months agoRelated Solutions
A monopolist faces a market demand curve of q=100-p. The monopolist’s cost function is given by...
A monopolist faces a market demand curve of q=100-p. The
monopolist’s cost function is given by (q) = 3000 + 20q.
a) If the monopolist can perfectly price discriminate, how many
units will be sold?
b) If the monopolist can perfectly price discriminate, how much
consumer surplus will there be?
c) If the monopolist cannot price discriminate, how much consumer
surplus will there be? (For this question, think long run.)
A monopolist faces a market demand: P = 200 – Q. The monopolist has cost function...
A monopolist faces a market demand: P = 200 – Q. The monopolist
has cost function as C = 1000 + Q2, and marginal cost MC = 2Q.
(
1) Solve for Marginal Revenue (MR) function.
(2) Find the profit-maximizing quantity? Profit?
(3) Suppose the monopolist decides to practice 3rd degree price
discrimination. Without solving for the 3rd degree price
discrimination, can you compare the new profit earned by the
monopolist with the old profit?
A monopolist with the cost function C(q) = q faces the market demand curve p =...
A monopolist with the cost function C(q) = q faces the
market demand curve
p = 101 -2q. What is the maximum amount the monopolist is
willing to pay for advertising that shifts its demand curve to
p = 101-q?
a) A duopolist faces a market demand curve given by P = 56-2Q . Each firm...
a) A duopolist faces a market demand curve given by
P = 56-2Q . Each firm can produce output at a constant MC
of $20 per unit. find the equilibrium quantity for the market.
b) A duopolist faces a market demand curve given by
P = 56-2Q . Each firm can produce output at a constant MC of $20
per unit. Firm one is the leading firm and makes the first
decision. find the equilibrium quantity for the market.
A monopolist faces a market demand curve given by QD= 100 – P/3 and has a...
A monopolist faces a market demand curve given by
QD= 100 – P/3 and has a cost function described by C =
30Q +1.5Q2. Solve for the monopolist’s profit maximizing
output and price.
With reference to question 4 above, suppose the demand facing
the monopolist increases to QD= 120 – P/2. Solve for the
new profit maximizing values of price and quantity. Describe how
the two answers differ and explain those differences in terms of
the demand change.
The market...
Q: A homogenous-good duopoly faces an inverse market demand function of P = 57 – Q....
Q:
A homogenous-good duopoly faces an inverse market demand
function of P = 57 – Q. Firm 1 has a constant marginal cost of MC1
= 10. Firm 2’s constant marginal cost is MC2 = 6. Calculate the
output of each firm, market output, and price for a Nash-Cournot
equilibrium. Draw the best response functions for each firm.
Show the solution steps please
Acme is a monopolist who faces inverse market demand function P (Q, y) = 100 -...
Acme is a monopolist who faces inverse market demand function P
(Q, y) = 100 - 2Q + y, where y is the quality level of Acme’s
product. Acme has cost function function C(Q) = 20Q.
Suppose quality is costly. Specifically, assume that Acme must
pay innovation cost I(y)= (1/4)(y^2). Thus, Acme’s total profits
are x(Q,y)=P(Q,y)Q - C(Q) - I(y). Assuming Acme is allowed to act
like a monopolist, we will work out Acme’s optimal quality choice,
y*.
1. Suppose,...
Suppose your firm is told that the demand function it faces from its market is given...
Suppose your firm is told that the demand function it faces from
its market is given by
Q = 8 − 0.5
Its cost per unit is constant and equal to $1.5. Assume that it
produces integer number of units (i.e. Q=0,1,2, 3...and so on).
(a) Describe in how you would use this demand function above to
obtain your consumers’ marginal utility (or maximum
willingness-to-pay) for each unit of your firm’s product.
(b) Construct a table showing the Price, Demand,...
Suppose your firm is told that the demand function it faces from its market is given...
Suppose your firm is told that the demand function it faces from
its market is given by
Q = 8 − 0.5p
Its cost per unit is constant and equal to $1.5. Assume that it
produces integer number of units (i.e. Q = 0,1,2, 3…and so on).
1. Describe in how you
would use this demand function above to obtain your consumers’
marginal utility (or maximum willingness-to-pay) for each unit of
your firm’s product.
Refer to a duopoly market in which the inverse demand function is given by P =...
Refer to a duopoly market in which the inverse demand
function is given by P = 96 − Q. Firm 1's cost function is
c(q1) = 6q1 + 300, and firm 2's cost function
is c(q2) = 6q2 + 600 (such that each firm has
MC = 6).
Q1: The outputs of the two firms in Cournot-Nash
equilibrium will be:
1) q1 = 45 and q2 = 0.
2) q1 = 30 and q2 = 30.
3) q1 = 45...
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