When would Cournot competition seem like a more reasonable model than Bertrand competition? Output levels can...

When would Cournot competition seem like a more reasonable model than Bertrand competition?

Output levels can be quickly changed in response to price changes
Production capacity is difficult to change

For the next three problems use the following data. Two firms in a duopoly each have a constant marginal cost of 4. The price function (demand) is P(Q)=100-Q.

Suppose that Firm 1 believes that Firm 2 will produce half of the monopoly output, q₂=24. How much should Firm 1 produce to maximize profit in the current period?

0
36
24
48

What is the Cournot Nash equilibrium level of output for Firm 1?

96
48
32
24

If competition is instead price competition a la Bertrand with identical products what will the equilibrium level of output be for each firm?

96
48
32
24

Expert Solution

Rahul Sunny answered 1 year ago

When is the Stackelberg variant of oligopoly competition more appropriate than the standard Cournot model? Group...

When is the Stackelberg variant of oligopoly competition more appropriate than the standard Cournot model? Group of answer choices when the firms are trying to collude. when one firm makes its output decision before the others. whenever there are more than two firms. when all firms enter the market simultaneously.

Discuss the Cournot and Bertrand Models of oligopolistic competition, highlighting their strengths and weaknesses. Can the...

Discuss the Cournot and Bertrand Models of oligopolistic competition, highlighting their strengths and weaknesses. Can the two models be reconciled? Can you give examples?

Communists believed that their system would be much more efficient than capitalism: They thought that competition...

Communists believed that their system would be much more efficient than capitalism: They thought that competition between companies was wasteful. Why build three separate headquarters for carmakers. (General Motors, Chrysler and Ford), when you can just build one? Why have three advertising budgets? Why pay for three CEOs? Why not put all the factories together, so that the same engineers can fix problems at all of the plants? Doesn’t one large firm maximize economies of scale? These are all good...

Under a monopolistic competition model with increasing returns to scale, how would equilibrium differ when the...

Under a monopolistic competition model with increasing returns to scale, how would equilibrium differ when the different varieties are closer substitutes for each other compared to when the varieties are not as close substitutes? Explain

When an independent variable has more than three levels, why should you conduct an ANOVA and...

When an independent variable has more than three levels, why should you conduct an ANOVA and post-hoc testing instead of just multiple t-tests?

Are we taking more vitamin supplements than our parents? If so or not I would like...

Are we taking more vitamin supplements than our parents? If so or not I would like you to please analyze how lifestyle changes between our parents and ours that have influenced this behavior of taking more or less vitamin supplements.

Every semester, I would like for more than 75% of my students to score a 70...

Every semester, I would like for more than 75% of my students to score a 70 or higher on the first test. This semester, out of the 72 students who took the first test, 59 got at least a C (scored higher a 70 or higher). Is there sufficient evidence to conclude, at the 10% significance level, that more than 75% of the students got at least a C on the first exam? Find the p-value. Identify the null and...

When can a series of cash flows have MORE THAN one IRR?

When can a series of cash flows have MORE THAN one IRR? a first cash flow is negative and all remaining cash flows are positive b first cash flow is positive and all remaining cash flows are negative c some cash flows after first year are positive and some cash flows are negative d can never have more than one IRR

Can you design a random graph model which can support more than one giant component? Describe...

Can you design a random graph model which can support more than one giant component? Describe what dependence structure between the edges and nodes can bring this about, or argue why such a graph is impossible. Assess the relevance of plausible existence and uniqueness of a giant component for a random graph in an applied setting.

When a company produces more inventory than it sells to customers, would the absorption costing income...

When a company produces more inventory than it sells to customers, would the absorption costing income statement profits or the variable costing income statements profits be higher for the period? Explain why (200 words minimum)

Question