Question
In: Economics
1. Suppose that there are two firms in an oligopoly industry, and they face inverse market...
1. Suppose that there are two firms in an oligopoly industry, and they face inverse market demand, ?(?) = 60 − 2?, where ? = ?1 + ?2. The total cost functions of the firms are:
?1 (?1 ) = 10?1
?2 (?2 ) = 2?2 2
a. Solve for the Cournot reaction functions of each firm.
b. Solve for the Cournot–Nash equilibrium quantities, price, and profits.
c. Suppose Firm 1 is a Stackelberg leader and Firm 2 is the follower. What are the Stackelberg equilibrium quantities and profits? What is the Stackelberg equilibrium price?
d. Solve for the equilibrium outputs, profits and price under the cartel market structure.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
2) Two firms, a and b, in a Cournot oligopoly face the inverse demand function p...
2) Two firms, a and b, in a Cournot oligopoly face the inverse
demand function p = 500 – 2Q. Their cost function is c
(qi) = 20 + 4qi2 for i = a, b.
Calculate the profit maximizing price output combination. (3)
3) Two firms, a and b, in a Cournot oligopoly face the inverse demand function p...
3) Two firms, a and b, in a Cournot oligopoly face the inverse
demand function p = 25 – Q. Their cost function is c
(qi) = 0.5*qi for i = a,
b. Calculate the profit maximizing price output
combination. (3)
Suppose that there are two firms in an industry and they face market demand y=400-0.5p where...
Suppose that there are two firms in an industry and they face
market demand y=400-0.5p where y=y1+y2 . The
total cost functions of the firms are C1(y1)=
40y1 and C2(y2)=
2y22.
a) Assume initially that the firms enter into Cournot
competition. Calculate the equilibrium market price and each firm’s
equilibrium output. That is, find y1c,
y2c, and pc.
b) Calculate the equilibrium market price and each firm’s
equilibrium output assuming that firm 2 is the Stackelberg leader
and firm 1...
Suppose that there are two firms in an industry and they face market demand y=400-0.5p where...
Suppose that there are two firms in an industry and they face
market demand y=400-0.5p where y=y1+y2 . The
total cost functions of the firms are C1(y1)=
40y1 and C2(y2)=
2y22.
a) Assume initially that the firms enter into Cournot
competition. Calculate the equilibrium market price and each firm’s
equilibrium output. That is, find y1c,
y2c, and pc.
b) Calculate the equilibrium market price and each firm’s
equilibrium output assuming that firm 2 is the Stackelberg leader
and firm 1...
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...
Two firms compete as a Stackellberg duopoly. The inverse market demand function they face is P...
Two firms compete as a Stackellberg duopoly. The inverse
market demand function they face is P = 65 – 3Q. The cost function
for each firm is C(Q) = 11Q. The outputs of the two firms
are
Two firms compete as a Stackelberg duopoly. The inverse market demand function they face is P...
Two firms compete as a Stackelberg duopoly. The inverse market
demand function they face is P = 65 – 3Q. The cost function for
each firm is C(Q) = 11Q. The outputs of the two firms are
QL = 9, QF = 4.5
QL = 9, QF = 10.5
QL = 6, QF = 3
QL = 4, QF = 2
Please help/ explain. Thank you
6. Assume an industry with two firms facing an inverse market demand of P = 100...
6. Assume an industry with two firms facing an inverse market
demand of P = 100 - Q. The product is homogeneous, and each firm
has a cost function of 600 + 10q + 0.25q2. Assume firms agree to
equally share the market. a. Derive each firm’s demand curve. b.
Find each firm’s preferred price when it faces the demand curve in
part a. Now assume that firm 1’s cost function is instead 25q +
0.5q2 while firm 2’s is...
SCENARIO 3: Consider an industry consisting of two firms producing an identical product. The inverse market...
SCENARIO 3: Consider an industry consisting of two firms
producing an identical product. The inverse market demand equation
is P = 100 − 2Q. The total cost equations for firms 1 and 2 are TC1
= 4Q1 and TC2 = 4Q2, respectively.
Refer to SCENARIO 3. Firm 1 is the Stackelberg leader and firm 2
is the Stackelberg
follower. The profit of the Stackelberg follower is:
a. $288.
b. $432.
c. $486.
d. $576.
e. None of the above.
An industry has two firms. The inverse demand function for this industry is p = 74...
An industry has two firms. The inverse demand function for this
industry is p = 74 - 4q. Both firms produce at a constant unit cost
of $14 per unit. What is the Cournot equilibrium price for this
industry?
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