Question
In: Economics
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.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
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Demand in a market dominated by two firms (a Cournot duopoly) is determined according to: P...
Demand in a market
dominated by two firms (a Cournot duopoly) is determined according
to: P = 300 – 4(Q1 + Q2), where P is the
market price, Q1 is the quantity demanded by Firm 1, and
Q2 is the quantity demanded by Firm 2. The marginal cost
and average cost for each firm is constant; AC=MC = $77.
The cournot-duopoly
equilibrium profit for each firm is _____.
Demand in a market dominated by two firms (a Cournot duopoly) is determined according to: P...
Demand in a market dominated by two firms (a Cournot duopoly) is
determined according to: P = 300 – 4(Q1 +
Q2), where P is the market price, Q1 is the
quantity demanded by Firm 1, and Q2 is the quantity
demanded by Firm 2. The marginal cost and average cost for each
firm is constant; AC=MC = $68.
The cournot-duopoly equilibrium profit for each firm is
_____.
Hint: Write your answer to two decimal places.
1) Demand in a market dominated by two firms (a Cournot duopoly) is determined according to:...
1)
Demand in a market dominated by two firms (a Cournot duopoly) is
determined according to: P = 300 – 4(Q1 +
Q2), where P is the market price, Q1 is the
quantity demanded by Firm 1, and Q2 is the quantity
demanded by Firm 2. The marginal cost and average cost for each
firm is constant; AC=MC = $65.
The cournot-duopoly equilibrium quantity produced by each firm
is _____.
Hint: Write your answer to two decimal places.
2)
Demand...
Two firms operate in a Cournot duopoly and face an inverse demand curve given by P...
Two firms operate in a Cournot duopoly and face an inverse
demand curve given by P = 200 - 2Q, where Q=Q1+Q2 If each firm has
a cost function given by C(Q) = 20Q, how much output will each firm
produce at the Cournot equilibrium?
a. Firm 1 produces 45, Firm 2 produces 45.
b. Firm 1 produces 30, Firm 2 produces 30
c. Firm 1 produces 45, Firm 2 produces 22.5
d. None of the above.
Two firms, firm 1 & firm 2, in a Cournot duopoly are facing the market demand...
Two firms, firm 1 & firm 2, in a Cournot duopoly are facing
the market demand given by P = 140 – 0.4Q, where
P is the market price and Q is the market quantity
demanded. Firm 1 uses old technology and has (total) cost of
production given by C(q1) = 200 + 15q1,
where q1 is the quantity produced by firm 1. Firm 2 has
managed to introduce a new technology to lower the per unit cost,
and its...
a.) Two identical firms compete as a Cournot duopoly. The market demand is P=100-2Q, where Q...
a.) Two identical firms compete as a Cournot duopoly. The market
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two firms, Q=q1 +q2. The marginal cost for each firm is 4. Derive
the best-response functions for these firms expressing what q1 and
q2 should be.
b.) Continuing from the previous question, identify the price
and quantity that will prevail in the Cournot duopoly market
c.) Now suppose two identical firms compete as a Bertrand
duopoly. The...
Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 128 - 3...
Consider a Cournot duopoly, the firms face an (inverse) demand
function: Pb = 128 - 3 Qb. The marginal cost for firm 1 is given by
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(Assume firm 1 has a fixed cost of $ 65 and firm 2 has a fixed cost
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Question #5: Consider a Cournot duopoly, the firms face an (inverse) demand function: Pb = 110...
Question #5: Consider a Cournot duopoly, the firms face an
(inverse) demand function: Pb = 110 - 7 Qb. The marginal cost for
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Consider a homogeneous good Cournot duopoly with inverse demand function given by p = 1 –...
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function given by p = 1 – Q. The two firms have identical marginal
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merger will result in a decrease of the marginal cost of the merged
firm by x per cent. How large would x need to be for welfare to
increase rather than decrease as a result of the merger?
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