Suppose the demand for pizza in a small isolated town is p = 10 - Q....

Suppose the demand for pizza in a small isolated town is p = 10 - Q. There are only two firms, A and B, and each has a cost function TC = 2 + Q. Compare the firms' profits if they behave as Cournot duopolists with their profits if they form a cartel and share the market.

Expert Solution

Rahul Sunny answered 2 years ago

Suppose the demand for burrito in a small isolated town is p = 8 - 2Q....

Suppose the demand for burrito in a small isolated town is p = 8 - 2Q. There are only two firms, A and B, and each has a marginal cost of 2. Determine the Cournot equilibrium. (hint: using the rule that Marginal Revenue’s slope is always twice as much as the slope of the residual demand curve as long as the residual demand is linear in output) Can you please write the answer on paper so it's clearer for me...

Suppose the demand for pizza in a small isolated town is p = 20 - 2Q. There are only two firms, A and B. Each has a cost function TC = 4 + 4Q.

Suppose the demand for pizza in a small isolated town is p = 20 - 2Q. There are only two firms, A and B. Each has a cost function TC = 4 + 4Q. Determine the equilibrium quantities of each if they form a cartel and share the market. Determine the equilibrium quantities of each if both behave as Cournot duopolists. Determine the equilibrium quantities of each if firm A is the Stackelberg leader.

Suppose the demand for donuts in Bethlehem is; P = 10 – Q where Q =...

Suppose the demand for donuts in Bethlehem is; P = 10 – Q where Q = qA + qB There are only two firms that sell donuts in Bethlehem, Firm A and Firm B. Each firm has the same cost function; TC = 2 + q a. Determine the Cournot equilibrium. b. Explain why the intersection of the best-response functions is the Cournot equilibrium.

a. Suppose the demand function P = 10 - Q, and the supply function is: P...

a. Suppose the demand function P = 10 - Q, and the supply function is: P = Q, where P is price and Q is quantity. Calculate the equilibrium price and quantity. b. Suppose government imposes per unit tax of $2 on consumers. The new demand function becomes: P = 8 – Q, while the supply function remains: P = Q. Calculate the new equilibrium price and quantity. c. Based on (b), calculate the consumer surplus, producer surplus, tax revenue,...

Suppose the demand function P = 10 - Q, and the supply function is: P =...

Suppose the demand function P = 10 - Q, and the supply function is: P = Q, where P is price and Q is quantity. Calculate the equilibrium price and quantity. b.Suppose government imposes per unit tax of $2 on consumers. The new demand function becomes: P = 8 – Q, while the supply function remains: P = Q. Calculate the new equilibrium price and quantity. c.Based on (b), calculate the consumer surplus, producer surplus, tax revenue and the deadweight...

Consider a small, isolated town in which a brewery faces the following inverse demand: ?=15−0.33?P=15−0.33Q. The...

Consider a small, isolated town in which a brewery faces the following inverse demand: ?=15−0.33?P=15−0.33Q. The brewery can produce beer at a constant marginal and average total cost of $1 per bottle. a. Calculate the profit-maximizing quantity and price. Specify all amounts to two decimal places. Q ≈ P ≈ $ b. Calculate consumer and producer surplus and the deadweight loss from market power. CS = $ PS = $ DWL = $ c. If it were possible to organize...

Suppose that the market demand is: P = 10 – Q, so that marginal revenue is:...

Suppose that the market demand is: P = 10 – Q, so that marginal revenue is: MR = 10 – 2Q. The marginal cost is: MC = 4 and average cost is: AC = 4. a. If the market structure is monopoly, determine the profit maximizing price and output for this monopolist and calculate its economic profit or loss at the profit maximizing output. b. If the market structure is perfect competition, determine the profit maximizing price and total output...

Suppose you have a demand curve of P = 10 - Q and a supply curve...

Suppose you have a demand curve of P = 10 - Q and a supply curve of P = 2 + Q. If the government imposes a tax of $8 per unit of quantity sold on the sellers in this market, then what is the market quantity traded as a result of the tax? Then, what are the consumer surplus, producer surplus, and deadweight loss (after the $8 tax)?

Suppose that demand is given by P = 130 ? Q and marginal cost equals 10....

Suppose that demand is given by P = 130 ? Q and marginal cost equals 10. Firms are Cournot competitors and play a supergame. The collusive agreement being considered is for each to produce half of the monopoly output. What is the critical discount factor to sustain collusion using grim punishment strategies if detection of deviation requires two periods?

Pizza Venice and Pizza Sun are two pizza restaurants in a town. The demand for pizzaat...

Pizza Venice and Pizza Sun are two pizza restaurants in a town. The demand for pizzaat Pizza Venice is given byQV= 14−PV+PS, while the demand for pizza at PizzaSun isQS= 8−2PS+PV. (Prices are in dollars and quantities are measured in 100customers). Pizza Venice has a unit cost of $4, while Pizza Sun has a unit cost of $2per pizza. a.(4 points)Write the profit function for each restaurant in terms of PV and PS. b.(8 points)Find each restaurant’s best reply function....

Question