Question

In: Economics

Consider 2 airplane manufacturers that compete as Cournot duopolists in the market for commercial aircraft. Arrowing...

Consider 2 airplane manufacturers that compete as Cournot duopolists in the market for commercial aircraft. Arrowing (firm A) has a cost function given by ?(??)=?/???, whereas SkyTrain (firm S) has a cost function given by ?(??)=?/???^?. The market demand function for commercial airliners is given by:?=???−?? where ?is the sum of the quantity of planes available for purchase.

a)If firm A chooses output first, find the Stackelberg equilibrium quantities supplied by each firm and find the equilibrium price.

Solutions

Expert Solution

Rahul Sunny answered 1 month ago
Next > < Previous

Related Solutions

The market demand curve for a pair of Cournot duopolists is given as: P = 36...
The market demand curve for a pair of Cournot duopolists is given as: P = 36 - 3Q, (Q = Ql + Q2). The constant per unit marginal cost is 12 for each duopolist. 12) What is the Cournot equilibrium price? a) 0 b) 10 c) 18 d) 20 e) None of the above 13) What is the Cournot equilibrium quantities for each firm? a) 1.33 b) 2.66 c) 18.14 d) 20 e) None of the above 14) What is...
The market demand curve for a pair of Cournot duopolists is given as: P = 60...
The market demand curve for a pair of Cournot duopolists is given as: P = 60 – 3Q. The constant per unit marginal cost is $6/unit for each duopolist. (Round your answers to two decimal points) a) Find the Cournot equilibrium price, quantity, and profits b) Solve the same problem as a Bertrand equilibrium. Find the longrun equilibrium price, quantities, and profits. c) Solve the same problem as a Stakelberg Leader-Follower equilibrium. Assume Firm 1 is the leader.
Firms A and B are Cournot duopolists producing a homogeneous good. Inverse market demand is P...
Firms A and B are Cournot duopolists producing a homogeneous good. Inverse market demand is P = 100 − Q , where P is market price and Q is the market quantity demanded. Each firm has marginal and average cost c = 40. (a) The two firms propose to merge. Derive total output, market price, profit and consumer surplus before the merger and after the merger. Explain intuitively any changes you see to these variables when the merger occurs. (b)...
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...
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 two firms, Firm A and Firm B, who compete as duopolists. Each firm produces an...
Consider two firms, Firm A and Firm B, who compete as duopolists. Each firm produces an identical product. The total inverse demand curve for the industry is P=250-QA+QB. Firm A has a total cost curve CAQA=100+QA2. Firm B has a total cost curve CBQB=100+2QB. Suppose for now, only Firm A exists (QB=0). What is the Monopoly equilibrium quantity and price? What is Firm A’s profit? Find the Nash Cournot equilibrium price and output level. What are the firms’ profits? Find...
Air Travel Inc. manufactures a wide variety of parts for commercial aircraft, including airplane engines. The...
Air Travel Inc. manufactures a wide variety of parts for commercial aircraft, including airplane engines. The component is purchased by OEM (Original Equipment Manufacturers) such as Boeing, for use in the larger and more powerful outboards. The units sell for $10,000, and sales volume averages 2,000 units per year. Recently, Air Travel’s major competitor lowered the price of the equivalent part of $9,500. The market was very competitive, and AirTravel realized it had to meet the new price or lose...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT