Question
In: Economics
You are given the market demand function. Q = 2200 - 1000p and that each duopoly...
You are given the market demand function.
Q = 2200 - 1000p
and that each duopoly firm's marginal cost is $0.07 per unit, which implies the cost function:
C (qi) = 0.07qi,
assuming no fixed for i = 1,2.
The Cournot Equilibrium quantities are q1 = _______ and q2=______ (enter your response as whole numbers).
The Cournot Equilibrium price is $_______ (round to the nearest penny).
Calculate the Cournot profits: firm 1 $______ and firm 2 $______ (round both responses to the nearest cent).
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Q: A homogenous-good duopoly faces an inverse market demand function of P = 57 – Q....
Q:
A homogenous-good duopoly faces an inverse market demand
function of P = 57 – Q. Firm 1 has a constant marginal cost of MC1
= 10. Firm 2’s constant marginal cost is MC2 = 6. Calculate the
output of each firm, market output, and price for a Nash-Cournot
equilibrium. Draw the best response functions for each firm.
Show the solution steps please
Refer to a duopoly market in which the inverse demand function is given by P =...
Refer to a duopoly market in which the inverse demand
function is given by P = 96 − Q. Firm 1's cost function is
c(q1) = 6q1 + 300, and firm 2's cost function
is c(q2) = 6q2 + 600 (such that each firm has
MC = 6).
Q1: The outputs of the two firms in Cournot-Nash
equilibrium will be:
1) q1 = 45 and q2 = 0.
2) q1 = 30 and q2 = 30.
3) q1 = 45...
Refer to a duopoly market in which the inverse demand function is given by P =...
Refer to a duopoly market in which the inverse demand
function is given by P = 96 − Q. Firm 1's cost function is
c(q1) = 6q1 + 0.5q12,
and firm 2's cost function is c(q2) = 6q2 +
0.5q22 (such that each firm has MC = 6 +
q).
Q1: The Cournot best-response function for firm 1 will
be:
1) q1 = 22.5 − q2/4
2) q1 = 30 − q2/3
3) q1 = 45 − q2/2
4) q1...
Two firms are participating in a Cournot duopoly. The demand function in the market is given...
Two firms are participating in a Cournot duopoly. The demand
function in the market is given by Q=430−2P. Each firm’s total cost
is given by C(q)=5q+q2.
(1) Write down the inverse demand function and the maximization
problem for Firm 1 given that Firm 2 is expected to produce
q2^e.
(2) Write down the reaction function q1(q2^e) for Firm 1.
(3) Find the market price, quantities supplied, and firms’ profits
in the Cournot
equilibrium of this game.
Two firms are participating in a Stackelberg duopoly. The demand function in the market is given...
Two firms are participating in a Stackelberg duopoly. The demand
function in the market is given by Q = 2000 − 2P . Firm 1’s total
cost is given by C1(q1) = (q1)^2 and Firm 2’s total cost is given
by C2(q2) = 100q2. Firm 1 is the leader and Firm 2 is the
follower.
(1) Write down the inverse demand function and the maximization
problem for Firm 1 given that Firm 2 is expected to produce
R2(q1).
(2) Compute...
The market demand of a duopoly market is given by the equation: P = a –...
The market demand of a duopoly market is given by the equation:
P = a – Q. The total costs of the two firms are TC1 =
cq1, TC2 = cq2 .
Solve for the Cournot-Nash Equilibrium using “double-the-slope”
rule. Draw the reaction curves of the two firms.
Find the output and price for monopoly and perfect competition.
Label these outputs on the graph of reaction curves.
Compare the outputs and prices from part a and part b.
In a duopoly, each firm has marginal cost MC = 100, and market demand is Q...
In a duopoly, each firm has marginal cost MC = 100, and market
demand is Q = 500 - 0.5p.
Assuming average cost is the same as marginal cost.
In which oligopoly, Cournot or Stackelberg, do firms have more
market power?
a. Cournot since the Lerner Index in the Cournot model is twice
as much as that in the Stackelberg model.
b. Stackelberg since the Lerner Index in the Cournot model is
twice as much as that in the Stackelberg...
The inverse market demand curve for a duopoly market is p=14-Q=14-q₁-q₂, where Q is the market...
The inverse market demand curve for a duopoly market is
p=14-Q=14-q₁-q₂, where Q is the market output, and q₁ and q₂ are
the outputs of Firms 1 and 2, respectively. Each firm has a
constant marginal cost of 2 and a fixed cost of 4. Consequently,
the Nash-Cournot best response curve for Firm 1 is q₁=6-q₂/2.
A. Create a spreadsheet with Columns titled q₂, BR₁, Q, p, and
Profit₁. In the first column, list possible quantities for Firm 2,
q₂,...
In the Bertrand duopoly, market demand is Q = ? ? Bp, and firms have no...
In the Bertrand duopoly, market demand is Q = ? ? Bp, and firms
have no fixed costs and identical marginal cost. Find a Bertrand
equilibrium pair of prices, (p1 , p2 ), and quantities, (q1, q2),
when the following hold.
a. Firm1 has fixed costs F>0.
b. Both firms have fixed costs F > 0.
c. Fixed costs are zero, but firm 1 has lower marginal cost than
firm 2, so c2 > c1 > 0. (For this one,...
Let market demand be given by Q(P) = 200 ? P. Each firm’s cost function is...
Let market demand be given by Q(P) = 200 ? P. Each firm’s cost
function is C(qi ) = 20qi , where i = 1, 2.
(a) Using the Cournot model, find each firm’s output, profit,
and price.
(b) Graph each firm’s reaction function. Show the Cournot
equilibrium.
(c) Suppose that the duopolists collude. Find their joint
profit-maximizing price, output, and
profit; find each firm’s output and profit.
(d) Does each firm have an incentive to increase output? What
is...
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