Suppose that the market demand curve for bean sprouts is given by P = 880 -...

Suppose that the market demand curve for bean sprouts is given by P = 880 - 4Q, where P is the price and Q is the total industry output. Suppose that the industry has two firms, a Stackelberg leader and a follower. Each firm has a constant marginal cost of $80 per unit of output. In equilibrium, total output by the two firms will be

100.
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Expert Solution

Rahul Sunny answered 2 years ago

The inverse market demand curve for bean sprouts is given by P(y ) = 100−2y ,...

The inverse market demand curve for bean sprouts is given by P(y ) = 100−2y , and the total cost function for any firm in the industry is given by TC(y)=4y. a. If the bean-sprout industry were perfectly competitive, what would be the industry output and price? b. Suppose that two Cournot firms operate in the market, and each firm has the above total cost function. Find the reaction functions of the two firms. c. Find the Cournot equilibrium output...

In a market demand and supply equations are: The demand curve is given as: P =...

In a market demand and supply equations are: The demand curve is given as: P = 50 - 3Q The supply curve is given as: P = 10 + 2Q Assuming a perfectly competitive market: What is the total wealth?

Suppose that the market demand curve is given by q=10-p and that production costs are zero...

Suppose that the market demand curve is given by q=10-p and that production costs are zero for each of four oligopolists. (a) Determine the level of output for each of the four oligopolists according to the Cournot model. (b) What general rule can you deduce from your answer to part (a)?

Assume the market demand curve is given by QM = 20 – P and the fringe...

Assume the market demand curve is given by QM = 20 – P and the fringe firm supply function is QFF = -6+P. The dominant firm’s marginal cost is MC = 4 and fixed costs are zero. 1. Using a new graph, explain what happens to residual demand curve if the fringe supply curve becomes perfectly elastic at $6. Further assume the dominant firm MC is upward slopping with an equation of MC = -2 +Q. Same market demand function....

#1) Consider a market with demand curve given by P = 90 - Q . The...

#1) Consider a market with demand curve given by P = 90 - Q . The total cost of production for one firm is given by TC(q) = (q2/2)+10 . The marginal cost of production is MC = q . a) If the market is perfectly competitive, find the supply curve for one firm. Explain. b) If the market price was $10, how many perfectly competitive firms are in the industry if they are identical? Explain. c) Find an expression...

The market demand curve is given by p = 100 - Q Two firms, A and...

The market demand curve is given by p = 100 - Q Two firms, A and B, are competing in the Cournot fashion. Both firms have the constant marginal cost of 70. Suppose firm A receives a new innovation which reduces its marginal cost to c. Find the cutoff value of c which makes this innovation "drastic".

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 demand curve in the product market for a football team is given by: P (Q)...

The demand curve in the product market for a football team is given by: P (Q) = 200 − 30Q where Q is the number of wins for the team and P is the price they can charge. There are 30 teams and each team has a monopoly in the product market. The production function for each team is given by: Q(L) = 2L where l is the amount of ‘talent’ that the hire. The aggregate supply curve for talent...

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.

Suppose the demand curve in a city is given by P = 100 - 2Q, where...

Suppose the demand curve in a city is given by P = 100 - 2Q, where P denotes price and Q the local GDP. The supply curve is given by P = 10 + Q. Now Suppose that due to an initial impulse of ΔX = 10 (Increase in exports) and further induced increases in local incomes the new induced demand curve changes to P = 150 - 2Q. Where are the local GDP and the corresponding income multiplier if...

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