Question
In: Economics
Suppose there are only two firms in the market, firm 1 and firm 2. They produce...
Suppose there are only two firms in the market, firm 1 and firm 2. They produce identical products. Firm 1 has a constant marginal cost where AC1 =MC1 =20, and firm 2 has a constant marginal cost AC2 =MC2 =8. The market demand function is given by Q = 100 - 0.5P.
a) Find the Cournot Nash Equilibrium price and quantity, write down the profits for each firm. (Use "q1" to represent output level for firm 1, and "profit1" to indicate the profit for firm 1, the same way to represent for firm 2
b)Now suppose firm 2 has the same marginal cost as firm 1's marginal cost. What is the profits for each firm under the Cournot model?
c)Next, suppose there are 3 firms in the market with AC =MC =20 . Assume that firm 2 and 3 continue to behave as Cournot (Nash) competitors, choosing their outputs simultaneously. However, firm 1 behave as a Stackelberg leader. Determine the Stackelberg equilibrium outputs and profits of the three firms in this case.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose there are two firms, Firm 1 and Firm 2, who produce identical goods. Together, they face the following market demand.
Suppose there are two firms, Firm 1 and Firm 2, who produce identical goods. Together, they face the following market demand.
Q=140-P
Assume both firms have a marginal cost of 20, so MC=20.
a. Monopoly: If the two firms could collude and act like a monopoly, what is the total quantity produced and what is the price?
b. Bertrand Competition with Identical Goods: Now assume that the firms simultaneously choose their price. What is the quantity produced and at...
Bertrand Price Competition Model: Suppose there are two firms, Firm 1 and Firm 2. They produce...
Bertrand Price Competition Model:
Suppose there are two firms, Firm 1 and Firm 2. They produce a
slightly differentiated product. The demand for the two products is
given respectively by:
Q1 = 12 – 2P1 + P2 Q2 = 12 – 2P2 + P1
Suppose each firm’s TFC = $20 and MC = $1 The
firm’s compete in prices. Firm 1 chooses P1 to maximize its profit
and Firm 2 chooses P2 to maximize profits. Find P1, P2, Q1, Q2
Suppose that two identical firms produce widgets and that they are the only firms in the...
Suppose that two identical firms produce widgets and that they
are the only firms in the market. Their costs are given by
C1 = 60 Q1
and
C2 = 60 Q2
where Q1 is the output of Firm 1 and Q2 is the output of Firm 2.
Price is determined by the following demand curve:
P= 2100 − Q where Q=Q1+Q2
Find the Cournot-Nash equilibrium. Calculate the profit of each
firm at this equilibrium. (For all of the following, enter...
Suppose that two identical firms produce widgets and that they are the only firms in the...
Suppose that two identical firms produce widgets and that they
are the only firms in the market. Their costs are given by
C1=60Q1
and
C2=60Q2
where
Q1 is the output of Firm 1 and Q2 is the output of Firm 2. Price
is determined by the following demand curve:
P=2700−Q where Q=Q1+Q2
Find the Cournot-Nash equilibrium. Calculate the profit of each
firm at this equilibrium. (For all of the following, enter a
numeric response rounded to two decimal places.)
When...
The market consists of 2 firms. The firms produce the same product. Firm 1 with $1...
The market consists of 2 firms. The firms produce the same
product. Firm 1 with $1 per-unit cost
(C1(q1)=1q1 ). Firm 2 with $1
per-unit cost (C2(q2)=1q2 ). Firm
1 can set its price to 2 or 3 or 4 $. Firm 2 can set its price to 2
or 3 or 4 $. The industry's demand function is Q= 10 – P (P-price,
Q- total quantities). The firms choose their quantities
simultaneously.
1a) Find Firm 1 optimal price P1=?...
The market consists of 2 firms. The firms produce the same product. Firm 1 with $1...
The market consists of 2 firms. The firms produce the same
product. Firm 1 with $1 per-unit cost
(C1(q1)=1q1). Firm 2 with $1
per-unit cost (C2(q2)=1q2). Firm 1
can produce 2 or 4 or 6 units. Firm 2 can produce 2 or 4 or 6
units. The industry's demand function is Q = 50 - P (P=price,
Q=total quantities). The firms choose their quantities
simultaneously.
1a) Find Firm 1's optimal production levels. q1=?
1b) Find Firm 2's optimal production levels....
Suppose there are two firms operating in a market. The firms produce identical products, and the...
Suppose there are two firms operating in a market. The firms
produce identical products, and the total cost for each firm is
given by C = 10qi, i = 1,2, where qi is the
quantity of output produced by firm i. Therefore the marginal cost
for each firm is constant at MC = 10. Also, the market demand is
given by P = 106 –2Q, where Q= q1 + q2 is the
total industry output.
The following formulas will be...
Question 2: Firm Competitions Two firms, Firm 1 and Firm 2, produce the same goods and...
Question 2: Firm Competitions
Two firms, Firm 1 and Firm 2, produce the same goods and are
competing in the same market. Firm 1 has a cost function of c1 =
20q1 and Firm 2 has a cost function of
c2 = 10q2.
The market price is determined by the inverse demand function
p=100−q1 −q2
(a) Suppose Firm 1 and Firm 2 compete in a quantity competition.
And suppose both firms decidesimultaneously. What are the
Cournot-Nash equilibrium quantities of Firm...
Suppose there are two firms, Firm A and Firm B that produce identical products in a...
Suppose there are two firms, Firm A and Firm B that produce
identical products in a duopoly. Firm A has a constant marginal
cost of production, MCA = 10 and Firm B has a constant
marginal cost, MCB = 14. The market demand curve for the
the product is given by P = 42 − 0.004Q where Q = (QA +
QB).
(a) Suppose that Firm A has a first-mover advantage. That is,
Firm A is able to choose output...
3.Firm A and Firm B are the only two firms in the housing market. Both these...
3.Firm A and Firm B are the only two firms in the housing
market. Both these firms produce the same type of houses. They face
the following market demand curve: Q= 28-(1/5) P where Q= QA +
QB
(PLEASE ASSIST WITH QUESTIONS : E~I)
a. Write the demand equation in terms of Q.
b. Write down the total revenue functions for both firms in
terms of QA & QB TR
c. Write down the marginal revenue (MR) functions for both...
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