Which is the correct answer? A duopoly faces the demand curve D(p) = 30 - .5p....

Which is the correct answer?

A duopoly faces the demand curve D(p) = 30 - .5p. Both firms in the industry have a total cost function given by C(q) = 4q. Suppose that firm 1 is a Stackelberg leader in choosing its quantity first. Firm 1’s profit function can be written as

A	q₁ = 14 - .5q₂.
B	q₂ = 14 - .5q₁.
C	60q -q².
D	56q₁ - q²₁.
E	28q₁ - q²₁.

Explain your answer/Show how you arrived at the solution:

Expert Solution

Rahul Sunny answered 7 months ago

American Airlines and United Airlines are duopoly that faces a market demand curve that is p...

American Airlines and United Airlines are duopoly that faces a market demand curve that is p = 120 – Q. American and United both have a constant marginal cost of 20. a. Calculate the output of each firm, the total market output, the price of each firm and the profit earned by each of them, if there is Cournot equilibrium. Show all the steps for full credit. b. Draw the market demand curve of the duopoly, the residual demand curve...

Suppose the Demand and supply curve for a particular product is as follows: D(p)=60-5p S(p)=5p+20 Suppose...

Suppose the Demand and supply curve for a particular product is as follows: D(p)=60-5p S(p)=5p+20 Suppose city council considers implementing a small lump sum tax of $T per unit traded (i.e. if the consumer pays p then the producer receives p-T). Question: What is the tax incidence on consumers? Hint 2: The derivative of demand and supply with respect to price is just the slope of the curves, in this case -5, and 5 respectively.

Suppose that there is a natural monopoly that faces a demand curve D(P) = 10000 -...

Suppose that there is a natural monopoly that faces a demand curve D(P) = 10000 - 2P with the total cost function C(Q) = 1000 + 100Q. The profit maximizing quantity for the natural monopolist, in the presence of a marginal cost pricing rule is ______ units The profit maximizing price that will be set by the monopolist that will be set in the presence of a marginal cost pricing rule is $_______ The average total cost per unit at...

Assume the demand function is D(p) = 150 – 5p (p is price). a. What is...

Assume the demand function is D(p) = 150 – 5p (p is price). a. What is the slope? 5(30-p) Oe=150-5p p=30 b. What is the y-intercept = 180 c. Using the definition of slope what does the demand do as price increases ∆푦 ∆푥 by $1? Demand will decrease by 2 d. Graph the function (p is on the x-axis, D(p) is on the y-axis). Hint: all you need are the x-intercept (set D(p) = 0 and solve for p)...

Suppose a monopolist faces the following demand curve: Q = 200 – 5P Also, the long...

Suppose a monopolist faces the following demand curve: Q = 200 – 5P Also, the long run total cost of the monopolist is given by TC = 20 + 2Q - .5Q2 a. What the monopolist’s MC function? (1/2 Point) b. What is the monopolist’s MR function? (1/2 Point) c. What is the monopolist’s profit maximizing level of output? (1/2 Point) d. What is monopolist’s profit maximizing level of price? (1/2 Point) e. How much profit is this monopoly...

Let the equation of the inverse demand curve for a Cournot duopoly be p = 88...

Let the equation of the inverse demand curve for a Cournot duopoly be p = 88 - 2 (q1 + q2). where q1 is the output of firm 1 and q2 is the output of firm 2. Firm i's cost function is c(qi) = 8qi . (a)What are the Cournot duopoly equilibrium outputs, price and profit per firm for this market? (b) Suppose that for a market with the inverse demand equation and cost functions of part (a), firm 1...

A monopolist faces a demand curve of Q = 164 – P, where P is price...

A monopolist faces a demand curve of Q = 164 – P, where P is price and Q is the output produced by the monopolist. What choice of output will maximize revenue? Group of answer choices 70 74 82 86 if monopolist produces good X and faces a demand curve X = 112 - 2P, where P is price. What is the monopolist's marginal revenue as a function of good X? Group of answer choices 44 - X 56 -...

The inverse demand curve for a Stackelberg duopoly is P =1932 - 3Q. The leader's cost...

The inverse demand curve for a Stackelberg duopoly is P =1932 - 3Q. The leader's cost structure is CL(QL) = 13QL. The follower's cost structure is CF(QF) = 25QF. Find the follower revenue Round all calculations to 1 decimal

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

2. A markets demand function is given by D(p) = 40 -.5P, and the market supply...

2. A markets demand function is given by D(p) = 40 -.5P, and the market supply function is given by S(P) = (1/3)P - 10. a. Draw the demand and supply curves, and calculate and label the market price and quantity on the graph. b. Calculate and label the consumer surplus and the producer surplus. c. If the government imposes a $10 per unit tax on producers, draw the old and new demand and supply curves. d. Calculate the new...

Question