Question
In: Economics
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 each firm in the Stackelberg equilibrium?
4.Which market do consumers prefer: monopoly or Stackelberg duopoly? Why?
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
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...
A single firm produces widgets, with a cost function and inverse demand function as follows, C(q)...
A single firm produces widgets, with a cost function and inverse
demand function as follows, C(q) = 150+2q P(Qd) = 10−0.08Qd
(a) Calculate the monopolist’s profit-maximizing price,
quantity, and profit if he can charge a single price in the market
(single price monopolist).
(b) Suppose the firm wants sell units after your answer to (a)
at a lower price in a later time period (2nd-degree price
discrimination). What quantity will be sold for what price in this
second-tier market? Calculate...
A monopoly faces market demand Q = 30−P and has a cost function C(Q) = Q^2...
A monopoly faces market demand Q = 30−P and has a cost
function C(Q) = Q^2
(a) Find the profit maximizing price and quantity and the
resulting profit to the monopoly.
(b) What is the socially optimal price? Calculate the
deadweight loss (DWL) due to the monopolist behavior of this firm.
Calculate consumer surplus (CS) and producer surplus (PS) given the
profit maximizing price.
(c) Assume that the government puts a price ceiling on the
monopolist at P =22. How...
A firm faces the following Average Cost function AC = 1/3Q^2- 18Q + 120 + 15/Q...
A firm faces the following Average Cost function
AC = 1/3Q^2- 18Q + 120 + 15/Q
Calculate the output level that minimizes
(i) Marginal Cost
(ii) Average Variable Cost.
A representative firm in a perfectly competitive market has a total cost function: ATC(q) = 72/q...
A representative firm in a perfectly competitive market has a
total cost function:
ATC(q) = 72/q + 4
+ 2q and MC(q) = 4 + 4q.
What is the firms fixed cost (FC) and variable cost (VC)?
Calculate the market price at which profits would be zero.
Calculate the profits or losses of the firms when price is
$16.
The market demand is given by Qd = 2000 – 20p. In the long run,
what will the market demand be?...
The market demand function is Q = 7000 - 1000p Each firm has a marginal cost...
The market demand function is Q = 7000 - 1000p
Each firm has a marginal cost of m = $0.16 Firm 1, the leader,
acts before Firm 2, the follower. Solve for the Stackelberg-Nash
equilibrium quantities, prices, and profits. Compare your solution
to the Cournot-Nash equilibrium.
The Stackelberg-Nash equilibrium quantities are:
q1 = _______ units and q2 = ________ units.
The Stackelberg-Nash equilibrium price is:
Profits for firm 1 is:
Profits for firm 2 is:
The Cournot-Nash equilibrium price is:...
1- Given a Perfect competition firm cost function C(Q) = 5 + Q2 & Market Price...
1- Given a Perfect
competition firm cost function
C(Q) = 5 +
Q2
& Market Price (P =
$10 )
- Find MR
- Maximum Profits
p?
- What is the Effect of Entry on
Firms Output & Profit ?
2- If You are a
monopolist with an inverse demand
P = 100 –
Q
and Cost
Function C(Q) =
125+4Q2
- Find Q* and P*
- Max Tp
Suppose a competitive firm has a short-run cost function: C(q) = 100 + 10q − q^2...
Suppose a competitive firm has a short-run cost function: C(q) =
100 + 10q − q^2 + q^3 , where q is the quantity of output.
1. Is this a short-run or a long-run cost function? Explain.
2. Find the firm’s marginal cost function: MC(q).
3. Find the firm’s average variable cost function: AVC(q).
4. Find the output quantity that the firm AVC at the minimum.
Does the MC increasing or decreasing before the quantity. And does
the MC increasing...
A monopolist with the cost function C(q) = q faces the market demand curve p =...
A monopolist with the cost function C(q) = q faces the
market demand curve
p = 101 -2q. What is the maximum amount the monopolist is
willing to pay for advertising that shifts its demand curve to
p = 101-q?
A competitive firm has the following short run cost function T C = Q 3 −...
A competitive firm has the following short run cost function T C
= Q 3 − 8Q 2 + 30Q + 5 .
(a) Find marginal cost, average cost, and average variable cost
and sketch them on a graph.
(b) At what range of prices will the firm supply zero output,
i.e. shutdown?
(c) Identify the firms supply curve
(d) At what price would the firm supply exactly 6 units of
output?
(e) Compute the price elasticity of supply at...
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