Question
In: Economics
Suppose two producers of fiberglass parts, Apex and Bflex, are duopolists competing in Cournot competition, where...
Suppose two producers of fiberglass parts, Apex and Bflex, are duopolists competing in Cournot competition, where quantities are chosen before price. Costs MC=ATC=$40 for each firm, and demand is P=200-q.
a. What are the reaction functions for each firm? What is the equilibrium quantity of fiberglass parts? What is the equilibrium price? What profits are earned by each firm?
b. Show a graph of reaction functions, along with the equilibrium quantity. What happens in the graph if Apex develops new technology which lowers their costs to MC=ATC=$30? Show the changes on your graph, and indicate the new equilibrium quantity.
c. Using the original information (with MC=ATC=40 for both), what is the equilibrium quantity and price if Apex is the leader (choosing quantity first) and Bflex is the follower? Is there a first-mover advantage? Explain.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose two producers of fiberglass parts, Apex and Bflex, are duopolists competing in Cournot competition, where...
Suppose two producers of fiberglass
parts, Apex and Bflex, are duopolists competing in Cournot
competition, where quantities are chosen before price. Costs
MC=ATC=$20 for each firm, and demand is P=200-q.
a.
What are the reaction functions for each firm? What is the
equilibrium quantity of fiberglass parts? What is the equilibrium
price? What profits are earned by each firm?
b.
Show a graph of reaction functions, along with the equilibrium
quantity. What happens in the graph if Apex develops new...
Cournot duopolists face a market demand curve given by P = 90 -Q where Q is...
Cournot duopolists face a market demand curve given by P = 90 -Q
where Q is total market demand. Each firm can produce output at a
constant marginal cost of 30 per unit. There are no fixed costs.
Determine the (1) equilibrium price, (2) quantity, and (3) economic
profits for the total market,(4) the consumer surplus, and (5) dead
weight loss.Show Work
24. Cournot duopolists face a market demand curve given by P = 90 - Q where...
24. Cournot duopolists face a market demand curve given by P =
90 - Q where Q is total market demand. Each firm can produce output
at a constant marginal cost of 30 per unit. There are no fixed
costs. Determine the (1) equilibrium price, (2) quantity, and (3)
economic profits for the total market, (4) the consumer surplus,
and (5) dead weight loss.
25. If the duopolists in question 24 behave according to the
Stackelberg Leader-Follower model, determine the...
Cournot duopolists face a market demand curve given by P = 90 - Q where Q...
Cournot duopolists face a market demand curve given by P = 90 -
Q where Q is total market demand. Each firm can produce output at a
constant marginal cost of 30 per unit. There are no fixed costs.
Determine the (1) equilibrium price, (2) quantity, and (3) economic
profits for the total market, (4) the consumer surplus, and (5)
dead weight loss.
Cournot duopolists face a market demand curve given by P = 90 - Q where Q...
Cournot duopolists face a market demand curve given by P = 90 -
Q where Q is total market demand. Each firm can produce output at a
constant marginal cost of 30 per unit. There are no fixed cost.
(Just need B through C answer please)
a. Find the equilibrium price, quantity and economic profit for
the total market, consumer surplus and Dead weight loss
b. If the duopolists in question above behave, instead,
according to the Bertrand model, what...
Use the following to answer questions 6-10: Suppose that firms 1, and 2 are Cournot duopolists...
Use the following to answer questions 6-10:
Suppose that firms 1, and 2 are Cournot duopolists in the salt
industry. The market demand curve can be specified as Q=20-p,
Q=q1+q2
(The firms choose their quantities simultaneously.)
The cost to firm 1 is C(q1)=1q1.
The cost to firm 2 is C(q2)=2q2.
6) Find Firm 1 optimal production levels q1=?.
Select one:
a.
0<q1<2
b.
2<q1<4
c.
4<q1<6
d.
6<q1
e.
None of the above
7) Find Firm 2 optimal production levels...
1. Consider two Cournot duopolists. Each firm sells a homogenous product and has a MC =...
1. Consider two Cournot duopolists. Each firm sells a homogenous
product and has a MC = c per unit, and no fixed costs. Market
demand is P = a−bQ, where market quantity sold Q = q1 +q2, where q1
is firm 1’s output and q2 is firm 2’s output. Each firm
simultaneously chooses its quantity to sell, then lets price clear
the market. a. What is firm 1’s best response function (or reaction
function)? b. Solve for the profit maximising...
Consider Cournot model of quantity competition between two firms, firm 1 and firm 2. Suppose the...
Consider Cournot model of quantity competition between two
firms, firm 1 and firm 2. Suppose the inverse demand for the firms
product is given by ?=40(?+2)−(?+1)(?1+?2)p=40(A+2)−(B+1)(q1+q2),
where ??qi denotes the quantity of firm ?i, ?=1,2i=1,2, ?A is 6 and
?B is 9. Each firm's average cost is equal to ?+2c+2, where ?c is
4.
a) Derive and accurately plot each firm's best
response function.
b) Find the (Nash) equilibrium quantities, price, profits and
consumer surplus.
c) Suppose next that each...
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.
Show how two Cournot mineral water producers use their cost and demand curves to determine their...
Show how two Cournot mineral water producers use their cost and
demand curves to determine their outputs given each others
output.
Show how this determines their best response curves.
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