Question
In: Economics
Suppose one Japanese firm and one American firm dominate the US market of widgets. They share...
Suppose one Japanese firm and one American firm dominate the US market of widgets. They share the same cost structure: TC = 250 + 40q. The only demand for widgets is in the US and is p = 100 – Q.
(a) If these two firms compete in quantity at the same time, what is the Cournot equilibrium output, price, profit level by each firm?
(b) Suppose the American firm acquires the Japanese firm and therefore becomes a monopoly in this market. Calculate the monopoly’s output, price, and Lerner Index. How much is the deadweight loss due to monopoly behavior?
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
one Japanese firm and one American firm dominate the US market of widgets. They share the...
one Japanese firm and one American firm dominate the US market
of widgets. They share the same cost structure: TC = 251 + 40q. The
only demand for widgets is in the US and is p = 100 – Q.
If these two firms compete in quantity at the same time, what is
the Cournot equilibrium output, price, profit level by each
firm?
The widget market is currently monopolized by Widgets R Us (or simply Widgets), but another firm...
The widget market is currently monopolized by Widgets R Us (or
simply Widgets), but another firm (Wadgets) is deciding whether to
enter that market. If Wadgets stays out of the market, Widgets will
earn $100 million profit. However, if Wadgets enters, Widgets can
either share the market, in which case the two companies enjoy a
total $20 million in profit, or wage a ruinous price war, in which
case both companies lose big and go bankrupt (call this $0 profit...
Initially there is one firm in the market for widgets. The firm has cost function C(Q)=3Q...
Initially there is one firm in the market for widgets. The firm
has cost function C(Q)=3Q and marginal cost function MC(Q)=3.
Market demand is given by P(Q)=20-3Q. What price will the firm
charge? What quantity will it sell? Now a second firm enters the
market. This firm has an identical cost function to the incumbent
firm. What is the Stackelberg equilibrium output for each firm if
firm 2 chooses its quantity second? What are the profits earned by
each firm...
Initially there is one firm in the market for widgets. The firm has cost function C(Q)=3Q...
Initially there is one firm in the market for widgets. The firm
has cost function C(Q)=3Q and marginal cost function MC(Q)=3.
Market demand is given by P(Q)=20-3Q.
1. What price will the firm charge? What quantity will it
sell?
2. Now a second firm enters the market. This firm has an
identical cost function to the incumbent firm. What is the
Stackelberg equilibrium output for each firm if firm 2 chooses its
quantity second?
3.What are the profits earned by...
Answer the following questions below: 1. If you sell widgets and a Japanese firm wishes to...
Answer the following questions below:
1. If you sell widgets and a Japanese firm wishes to buy your
product, what terms should your contract contain?
2. How might negotiating a sales contract with a Chinese
supplier differ from dealing with a German supplier of
materials?
3. Does the CISG provide adequate protection to U.S. exporters
in their dealings with buyers in developing economies?
4. Do the practices outlined in Chapter 5 concerning the
documentary sale provide adequate protection to U.S....
1. Suppose the exchange rate between US$ and Euro, US$ and Japanese Yen are: 1...
1. Suppose the exchange rate between
US$ and Euro, US$ and Japanese Yen are:
1 US$ = 2 Euro; 1
US$ = 100 Yen.
Suppose the
interest rates published by central banks in the U.S., Euro zone,
and Japan are 2%, 3%, and 4%, respectively;
And, suppose the
inflation rates in the U.S., Eurozone, and Japan are 1%, 2%, and
1%,
respectively.
Therefore, (calculation formula is optional)
Q1.1: How much Yen can 1 Euro exchange
for?...
Three companies, Optimax, Megachug, and Thirstoid, each with about the same market share, dominate the sports...
Three companies, Optimax, Megachug, and Thirstoid, each with about the same market share, dominate the sports drink market. In an attempt to increase profits, the three companies coordinate their actions and agree to restrict their collective output of sports drinks, thereby increasing the price of sports drinks in the market.
This is an example of:
A price war
Price leadership
A cartel
There is an industry with 5 firms. There is one large firm with 80% market share,...
There is an industry with 5 firms. There is one large firm with
80% market share, three medium-sized firms with 6% market share,
and one small firm with 2% market share. Calculate the
Herfindahl-Hirschman Index (HHI) for this industry. Please show
your work.
Is this industry either highly concentrated, moderately
concentrated, or not concentrated?
There is an industry with 5 firms. There is one large firm with
80% market share, three medium-sized firms with 6% market share,
and one small...
Suppose that the U.S. firm Halliburton buys construction equipment from the Japanese firm Komatsu, at a...
Suppose that the U.S. firm Halliburton buys construction
equipment from the Japanese firm Komatsu, at a price of 200,000
yen. The equipment is to be delivered to the US and paid for (in
yen) in one year. The current exchange rate is 100 yen=$1. The
current interest rate on one-year U.S. Treasury bills is 6%, and
the interest rate on one-year Japanese government bonds is 4%.
a)If Halliburton exchanges dollars for yen today and invests in
the Japancese government bonds...
1.) The HHI in this market is Market share Firm A 50% Firm B 30% Firm...
1.) The HHI in this market is
Market share
Firm A
50%
Firm B
30%
Firm C
20%
a. 3800
b. 1800
c. 100%
d. 6800
2.) A good example of a vertical merger is a
a. Fast food franchise buying another franchise
b. Wire manufacturer buying a copper mine
c. Cigarette company buying a cookie company
d. Airline buying a car manufacturer
3. You would most often find economies of scale in a (n)
a. Natural monopoly
b. Very...
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