Question
In: Economics
Suppose there are only two firms serving your market with the high-speed Internet access. Market demand...
- Suppose there are only two firms serving your market with the
high-speed Internet access. Market demand is estimated to be P = 40
– 5(Q1 + Q2). Each firm’s marginal cost is
$20.
- Suppose each firm maximizes its own profit, treating the other’s quantity as constant. Find an expression for firm 1’s optimal output as it depends on firm 2’s. In equilibrium, what common levels of output will each firm supply?
b. Suppose the two firms decide to collude in setting their outputs. What outputs should they set and why?
Solutions
Rahul Sunny answered 8 months agoRelated Solutions
Suppose there are two firms in an instant coffee market. Market demand curve is given by...
Suppose there are two firms in an instant coffee market. Market
demand curve is given by P = 100 – 2Q, and marginal cost of
production for both firms are equal and constant at m=12.
a) Find the output that will maximize firm’s profit if the two
firms choose price simultaneously. What is the price that the firm
will charge and how much is the profit of each firm?
b) Find the output that will maximize firm’s profit if two...
Suppose there are two firms in an instant coffee market. Market demand curve is given by...
Suppose there are two firms in an instant coffee market. Market
demand curve is given by P = 100 – 2Q, and marginal cost of
production for both firms are equal and constant at m=12.
a) Find the output that will maximize firm’s profit if the two
firms choose price simultaneously. What is the price that the firm
will charge and how much is the profit of each firm? ( 10
marks)
b) Find the output that will maximize firm’s...
Suppose there are two firms in an instant coffee market. Market demand curve is given by...
Suppose there are two firms in an instant coffee market. Market
demand curve is given by P = 100 – 2Q, and marginal cost of
production for both firms are equal and constant at m=12.
a) Find the output that will maximize firm’s profit if two firms
choose quantity simultaneously. What is the price that they will
charge and how much is the profit of each firm?
b) Suppose the quantity game as in (b) is played by the firm...
Suppose there are only two firms, firm1 and firm2, in the market. They both choose a...
Suppose there are only two firms, firm1 and firm2, in the
market. They both choose
a quantity to produce simultaneously. The market price is
determined by the market
demand:
p =130-(Q1+Q2)
where Q1 is the output quantity of firm1 and Q2 is the output
quantity of firm2. Firm1’s
total cost of production is 10Q1 and firm2’s total cost of
production is 10Q2. That is, both
firms have a constant marginal cost of 10.
Task 1. What’s firm 1’s best response...
Suppose there are only two firms, firm1 and firm2, in the market. They both choose a...
Suppose there are only two firms, firm1 and firm2, in the
market. They both choose
a quantity to produce simultaneously. The market price is
determined by the market
demand:
p =130-(Q1+Q2)
where Q1 is the output quantity of firm1 and Q2 is the output
quantity of firm2. Firm1’s
total cost of production is 10Q1 and firm2’s total cost of
production is 10Q2. That is, both
firms have a constant marginal cost of 10.
Task 1. What’s firm 1’s best response...
A researcher wishes to estimate the proportion of adults who have high speed internet access. What...
A researcher wishes to estimate the proportion of adults who
have high speed internet access. What size sample should be
obtained if she wishes the estimate to be within .03 with 99%
confidence if a) she uses a previous estimate of .58? b) she does
not use any prior estimate?
1. a. A researcher wishes to estimate the proportion of adults who have high-speed Internet access....
1.
a. A researcher wishes to estimate the proportion of adults who
have high-speed Internet access. What size sample should be
obtained if she wishes the estimate to be within 0.3 with 99%
confidence?
b.
it is believed that people prefer rubies over other gems. In a
recent simple random survey of 150 people, 63 said they would
prefer a ruby over other gems. Use this sample data to complete a
hypothesis test to determine if a majority of people...
Suppose that market demand is given by ? = 180 − ?/3. The two identical firms...
Suppose that market demand is given by ? = 180 − ?/3. The two
identical firms in the market both have marginal costs of 20. Draw
the reaction curves on a graph and find the Cournot equilibrium
price and quantities.
Suppose that two firms form an oligopoly in a market with the demand function P =...
Suppose that two firms form an oligopoly in a market with the
demand function P = 200 − 2Q,
where the market output (Q) is the sum of the outputs of
the two firms: Q = q1 +
q2. Firm 1 has total fixed cost of
TFC1 = 50 and total variable
cost of TVC1 =
20q1. Similarly, firm 1 has total
fixed cost of TFC2 = 50 and
total variable cost of TVC2 =
20q2. Assume that the features...
Suppose there are only two firms in the market, firm 1 and firm 2. They produce...
Suppose there are only two firms in the market, firm 1 and firm
2. They produce identical products. Firm 1 has a constant marginal
cost where AC1 =MC1 =20, and firm 2 has a constant marginal cost
AC2 =MC2 =8. The market demand function is given by Q = 100 -
0.5P.
a) Find the Cournot Nash Equilibrium price and quantity, write
down the profits for each firm. (Use "q1" to represent output level
for firm 1, and "profit1" to...
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