Consider Bertrand Competition with demand curve P = 56 − 2 Q. There are two firms....

Consider Bertrand Competition with demand curve P = 56 − 2 Q. There are two firms. Firm 1 has MC=12. Firm 2 has MC=8. What is the equilibrium number of units transacted in this market (Round to the nearest integer)?

Expert Solution

Rahul Sunny answered 7 months ago

Suppose two firms are engaged in Stackelberg Competition. The demand curve is P = 56 -...

Suppose two firms are engaged in Stackelberg Competition. The demand curve is P = 56 - 2Q and MC=20. What is the equilibrium market quantity?

1. Consider two firms facing the demand curve P = 50 ? 5Q, where Q =...

1. Consider two firms facing the demand curve P = 50 ? 5Q, where Q = Q1 + Q2. The firms cost functions are C1(Q1) = 20 + 10Q1 and C2(Q2) = 20 + 10Q2. a. Suppose both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? How would your answer change if the firms have not yet entered the industry? b. How much should Firm 1 be willing to...

The market demand curve is given by p = 100 - Q Two firms, A and...

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".

Consider two identical firms in a Cournot competition. The market demand is P = a –...

Consider two identical firms in a Cournot competition. The market demand is P = a – bQ. TC1 = cq1 = TC2 = cq2 . Find the profit function of firm 1. Maximize the profit function to find the reaction function of firm 1. Solve for the Cournot-Nash Equilibrium. Carefully discuss how the slope of the demand curve affects outputs and price.

Firms A and B are Bertrand duopolists facing market demand, P = 300-Q, where Q =...

Firms A and B are Bertrand duopolists facing market demand, P = 300-Q, where Q = QA+QB, and marginal cost, MC = 68. a)What level of output will each firm will produce? b)What price will each charge? c)Why is this outcome a Nash equilibrium?

Consider 2 firms facing the demand curve: P=90-5Q, where Q =Q1+Q2 The firms' cost functions are...

Consider 2 firms facing the demand curve: P=90-5Q, where Q =Q1+Q2 The firms' cost functions are C1(Q1)=15+Q1 and C2(Q2)=15+30Q2 How much should Firm 1 be willing to pay Firm 2 if collusion is illegal but a takeover is not? Firm 1 should be willing to pay __.

Consider an oligopolist market with demand: Q = 18 – P. There are two firms A...

Consider an oligopolist market with demand: Q = 18 – P. There are two firms A and B. The cost function of each firm is given by C(q) = 8 + 6q. The firms compete by simultaneously choosing quantities. a. Write down firm A’s profit function and derive firm A’s reaction function. b. Plot the reaction functions of both firms in a diagram. c. What is the optimal quantity produced by firm A and firm B? d. Now suppose firm...

1. Consider two firms facing the demand curve P=50-5Q where Q = Q1 + Q2. The...

1. Consider two firms facing the demand curve P=50-5Q where Q = Q1 + Q2. The firms’ cost functions are C1(Q1) = 20+10Q1 and C2(Q2) = 10+12Q2. Suppose both firms entered the industry. a) What is the joint profit-maximizing level of output? b) What is total production (Q1+Q2) at the joint profit-maximizing level? c) What is firm 1's output if they behave non-cooperatively (Cournet Model)? d) What is firm 2's output if they behave non-cooperatively (Cournet Model)? e) How much...

Consider a market with two firms, facing the demand function: p = 120 – Q. Firms...

Consider a market with two firms, facing the demand function: p = 120 – Q. Firms are producing their output at constant MC=AC=20. If the firms are playing this game repetitively for infinite number of times, find the discount factor that will enable cooperation given the firms are playing grim trigger strategy.

problem 1. Suppose two firms facing a demand D(p) compete by setting prices simultaneously (Bertrand Competition)....

problem 1. Suppose two firms facing a demand D(p) compete by setting prices simultaneously (Bertrand Competition). Firm 1 has a constant marginal cost c1 and Firm 2 has a marginal cost c2. Assume c1 < c2, i.e., Firm 1 is more efficient. Show that (unlike the case with identical costs) p1 = c1 and p2 = c2 is not a Bertrand equilibrium. how do you solve this?

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