In: Economics

# Demand in a market dominated by two firms (a Cournot duopoly) is determined according to: P...

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##### 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.
##### 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 demand is P=100-2Q, where Q stands for the combined output of the 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...
##### 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...
##### Consider two identical firms in a Cournot competition. The market demand is P = a –...
Consider two identical firms in a Cournot competition. The market demand is P = a – bQ. TC1 = cq1 = TC2 = cq2 . Find the profit function of firm 1. Maximize the profit function to find the reaction function of firm 1. Solve for the Cournot-Nash Equilibrium. Carefully discuss how the slope of the demand curve affects outputs and price.
##### Assume that two firms are in a Cournot oligopoly market. Market demand is P=120 - Q...
Assume that two firms are in a Cournot oligopoly market. Market demand is P=120 - Q where Q isthe aggregate output in the market and P is the price. Firm 1 has the cost function TC(Q1)=30 + 10Q1 and Firm 2 has the cost function TC(Q2)=15 + 20Q2. a) Write down the Profit function of Firm 1: Profit function of Firm 2: b) Using the profit functions in part (a), obtain the reaction function of Firm 1 to Firm 2....
##### In a duopoly market with two identical firms, the market demand curve is: P=50-2Q And the...
In a duopoly market with two identical firms, the market demand curve is: P=50-2Q And the marginal cost and average cost of each firm is constant: AC=MC=2 a. Solve for firm 1’s reaction curve and graph b. Solve for firm 2’s reaction curve and graph c. Solve for each firm’s Q and P in a cournot equilibrium and show on your graph i. What is the profit for each firm?
##### Consider a Cournot duopoly where P = 400 - 4Q1 - 4Q2. The two firms are...
Consider a Cournot duopoly where P = 400 - 4Q1 - 4Q2. The two firms are identical. Each firm treats the other firm’s production quantity as a constant. The marginal cost of production is 16 for every unit. What is the best production level for Firm 1?