The inverse market demand curve is P = 170 – 4Q. Two firms in
this market are evenly splitting the output. Each firm produces the
product at a constant marginal cost of $10. Which of the following
statements is TRUE? I. If one firm produces 2 more units of output,
its profits will rise to $864. II. If neither firm cheats, each
firm will earn a profit of $800. III. If one firm produces 3 more
units of output, the...
The market demand curve is given by
p = 100 - Q
Two firms, A and B, are competing in the Cournot fashion. Both
firms have the constant marginal cost of 70. Suppose firm A
receives a new innovation which reduces its marginal cost to c.
Find the cutoff value of c which makes this innovation
"drastic".
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...
The market demand curve for mineral water is P=15-Q. Suppose
that there are two firms that produce mineral water, each with a
constant marginal cost of 3 dollars per unit. Suppose that both
firms make their production decisions simultaneously. How much each
firm should produce to maximize its profit? Calculate the market
price.
The quantity produced by firm 1 is denoted by Q1
The quantity produced by firm 2 is denoted by Q2.
The total quantity produced in the market...
In this problem you will show how 5 firms facing a market demand
curve P = 260 ? 2Q, zero fixed costs, and constant marginal cost C
= 20, can cooperate in every period of an infinitely-repeated game
in which they employ the trigger strategies that we saw in class; a
firm cooperates until someone fails to cooperate, which triggers
noncooperation forever. More specifically, you need to derive the
following:
a (5). Firm profits from collusion.
b (5). Firm Cournot...
Two firms set prices in a market with demand curve Q = 6 − p,
where p is the lower of the two prices. If firm 1 is the lower
priced firm, then it is firm 1 that meets all of the demand;
conversely, the same applies to firm 2 if it is the lower priced
firm. For example, if firms 1 and 2 post prices equal to 2 and 4
dollars, respectively, then firm 1–as the lower priced firm–meets...
.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
Two firms set prices in a market with demand curve Q = 6 − p,
where p is the lower of the two prices. If firm 1 is the lower
priced firm, then it is firm 1 that meets all of the demand;
conversely, the same applies to firm 2 if it is the lower priced
firm. For example, if firms 1 and 2 post prices equal to 2 and 4
dollars, respectively, then firm 1–as the lower priced firm–meets...
An industry has the market demand of: P= 6300−2Q. The market
is served by a large collection of firms all with constant marginal
costs: MC= 4200
a. what is initial price
b. if one firm was able to innovate and drive their MC=3200,
what is price and quantity this firm would choose to set max
profits as a monopolist if it had the market to itself?
c. suppose a one firm is able to drive their MC=3200. what is
the...