The marginal cost of a product is fixed at MC = 20. The demand for the product is Q = 100 - 2P. (a) Now consider a Cournot model with two firms that are choosing quantities simultaneously. What is the best reply (best response) function for each firm? What is theNash equilibrium? What is the total surplus?
Q: 1. Two companies (A and B) are duopolists that produce identical products. Demand for the products…
A: πA = P x QA − TCA = (10,000 − QA − QB) x QA − (500,000 + 200QA + .5QA2) = −500,000 +…
Q: Consider a homogeneous good industry (such as an agricultural product) with just two firms and a…
A: This game represents Bertrand competition of duopoly market structure where two firms select optimum…
Q: 1. The market (inverse) demand function for a homogeneous good is P(Q) = 10 – Q. There are two…
A: Cournot model of oligopoly model argues that the 2 rival firms can find equilibrium point if each…
Q: Consider two firms with a homogeneous product who face the market demand function p = 2 – q1 – 42,…
A: Demand function : p = 2 - q1 - q2 Marginal Cost : c =1 There are two firms competing in quantities…
Q: The inverse market demand curve is P(Y) = 365-2Y, where Y = YA+YB, and the total cost function for…
A: We are given: Market demand : P = 365 - 2Y where Y = YA + YB Cost function for both the firms: C=…
Q: Two firms, each in a different country, sell homogeneous output in a third country. Government 1…
A: Introduction We have given two firms, one is leader and other is follower. Let's start with firm 2…
Q: Three electricity generating firms are competing in the market with the inverse demand given by P(Q)…
A:
Q: Two dairy farmers produce milk for a local town with local milk demand given by Q=100-1/3P (P…
A: (a) The reaction function of each farmer :…
Q: (6) For each situation, solve for the Cournot-Nash equilibrium (Capacity Constraints) 6a) Suppose…
A:
Q: According to the Five Competitive Forces Model, the number of competitors in an industry affects a…
A: With an intention to analyze the competitive environment of a company, through various types/ways,…
Q: Consider a market that only includes two large firms. The (inverse) market demand is P = 100 – Q.…
A: Answer: Given: Inverse market demand function: P=100-QWhere,Q=q1+q2 Firm 1 cost function:C1=2q1Firm…
Q: In the Salop model the price for a firm in a symmetric equilibrium is p (n) = c + where C is the…
A: Given information Inverse demand function for firm in symmetric equilibrium=P(n)=C+T/n Free entry…
Q: (Bertrand’s duopoly game with discrete prices) Consider the variant of the example of Bertrand’s…
A: Nash equilibrium is an equilibrium situation from a which a firm is not willing to deviate from its…
Q: OLIGOPOLY 1.- Each of two firms, firms 1 and 2, has a cost function C(q) = 30q; the inverse demand…
A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…
Q: Which one of the following statements is correct? A. The Bertrand model must be wrong because…
A: NASH EQUILIBRIUM -It is a solution to a non-cooperative game in which players have no motivation to…
Q: Suppose the inverse demand for a particular good is given by P= 1200-12Q. Furthermore, there are…
A: Answer -
Q: Consider the following Cournot model. • The inverse demand function is given by p = 30 –Q, where Q…
A: GIVEN P = 30 - Q Q = q₁ + q₂
Q: I understand the other parts. Can you please answer part d and e below? Each of two firms, firms 1…
A: (d)It is given that,Inverse demand function: P = 120 – Q where Q = q1 + q2.Cost function:Firm 1:…
Q: Consider the following Cournot model. • The inverse demand function is given by p = 30 –Q, where Q =…
A: In the Cournot model, businesses compete on the amount of output they will generate, which they…
Q: Two firms produce a homogenous product. Let p denote the product's price. The output level of firm 1…
A: The demand curve refers to the inverse relationship between the price and quantity demanded. The…
Q: In a Cournot duopoly model, the market demand curve is given by P = 100 - yI -y where y, is the…
A: Market Demand : P=100-y1-y2 Cost of firm 1: 75+8y1 Cost of firm 2: 100+12y2 Firm1 TR1=Py1…
Q: Consider a two-firms Cournot model with constant returns to scale. Assume also that the inverse…
A: In the Cournot model, firms compete with each other on the basis of quantity not on price, the price…
Q: Assume that two companies (A and B) are duopolists that produce identical products. Demand for the…
A: Profit maximizing quantity of output is the long-run equilibrium output. And, Profit maximizing…
Q: Oligopoly Consider a market in which the market demand curve is given by P = 18 - Q, Firm 1 has a…
A: Market demand curve: The sum of all individual demand curves in a market is the market demand curve.…
Q: Two firms produce and sell differentiated products that are substitutes for each other. Their demand…
A:
Q: .. Two firms compete in price in a market for infinite periods. In this market, there are N…
A: 1 a) In infinite repeated bertrañd game, both the firms will follow Grim trigger strategy: Set…
Q: Three electricity generating firms are competing in the market with the inverse demand given by P(Q)…
A:
Q: American Airlines and Braniff Airways are the two airlines operating flights from your region.…
A: Game theory is a study of how individuals apply strategies to achieve an outcome that is in their…
Q: Suppose two firms, A and B, have a cost function of C(q;) = 30qi, for i = A,B. The inverse demand…
A: An oligopoly is a form of market where there are a few sellers with a large number of buyers.…
Q: Two firms produce and sell differentiated products that are substitutes for each other. Their demand…
A: The total revenue of the firm can be calculated by multiplying the price with quantity. For the firm…
Q: Three firms with identical marginal cost of 30 compete in a market with inverse demand of P = 50 -…
A: Demand: It refers to the consumption of goods and services in the economy. The more demand of the…
Q: Consider an industry with two identical firms (denoted firm 1 and 2) producing a homogenous good.…
A:
Q: Consider the Bertrand model and answer the question below related to the content. Assume that each…
A: In the Bertrand Duopoly Game, firm please the game in terms of price so the quantity are adjusted…
Q: Suppose the market inverse demand function of a homogeneous product is given as P(Q) = 200-Q, and…
A: Demand: P = 200-Q 3 firms = q1,q2,q3 When firm 1 and 2 merge = q1+q2 = q* MC = 20 Q = q*+q3 P =…
Q: Two firms sells an identical product. The demand function for each firm is given: Q = 20 - P, where…
A:
Q: Assume that two companies (C and D) are duopolists that produce identical products. Demand for the…
A: Given; Demand function; P=600-QC-QD Total Cost function of C; TCC=25000+100QC Total Cost function of…
Q: Consider two identical firms with a unit cost of production of $10 and a market demand of p= 60-y.…
A: Consider two identical firms with a unit cost of production of $10 and a market demand of p= 60-y.…
Q: Given the following demand and supply functions for two competing products. Qd1 =82 – 3p1 + p2; Qs1…
A: Given, the demand and supply equations for two goods:…
Q: Two firms sell an identical product in a market by setting prices simultaneously. Consumers buy from…
A: Nash Equilibrium is the starategy from which no player has the incentive to deviate from chosen…
Q: The marginal cost of a product is fixed at MC = 20. The demand for the product is Q = 100 - 2P.…
A: Given values: Demand, Q = 100 - 2P. MC = 20
Q: Firms A and B choose how much of a a homogenous good to produce at a marginal cost of 1. The inverse…
A: Given information 2 firms Firm A and Firm B Demand function P=25-QA-QB MC-1 Output can by any number…
Q: Kafue Water and Sewerage Company and Lusaka Water and Sewerage Company are duopolistic firms…
A: Introduction Kafue Water and Sewerage Company and Lusaka Water and Sewerage Company are duopolistic…
Q: Two firms, Firm 1 and Firm 2, compete by simultaneously choosing prices. Both firms sell an…
A: As we answer only three subparts but the question has more than 3 subparts, we would be answering…
Q: Which of the following is true for Firm 1? Peach strictly dominates Apple. Banana strictly…
A: Any strategy for a player which provides better payoffs to him in every scenario is said to be…
-
The marginal cost of a product is fixed at
MC = 20. The demand for the product is Q = 100 - 2P.
(a) Now consider a Cournot model with two firms that are choosing quantities simultaneously. What is the best reply (best response) function for each firm? What is theNash equilibrium? What is the total surplus?
(b)What do you expect the total surplus would be with three firms? Why? (You do not need to calculate an exact value. You can say ”total surplus is at least 100”, or ”total surplus is at most 80”)
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
- An Australian firm and a US firm produce a homogeneous good that is sold only in Japan. The marginal cost of producing the good is constant and equal to 30 in both countries. The demand curve for the good in Japan is: P = 120-Q where Q = QA +QUS represents the sum of the quantities. produced by the Australian and the US firms, respectively. (b) Assume the Australian firm can commit to an output before the US firm. Solve for the Stackelberg Equilibrium price, sales and profits of each firm in Japan. Price profit AUS2 ,output_US2 profit_US2 output_AUS2Consider an industry with N firms that compete by setting the quantities of an identical product simultaneously. The resulting market price is given by: p = 1000 − 4Q. The total cost function of each firm is C(qi) = 50 + 20qi . (a) Derive the output reaction of firm i to the belief that its rivals are jointly producing a total output of Q-i . Assuming that every firm produces the same quantity in equilibrium, use your answer to compute that quantity. (b) Suppose firms would enter (exit) this industry if the existing firms were making a profit (loss). Write down a mathematical equation, the solution to which would give you the equilibrium number of firms in this industry. You don’t have to solve this equation.Two firms face the same inverse demand curve: P= 370– q, – 92 . Both firms have the same constant marginal cost: MC = 10. (a) %3D if both firms choose their output levels simultaneously, how much profits and consumer surplus will be earned in equilibrium? (b) Firm 1 is offered the following deal: by paying Z it can either (i) acquire a new technology that lowers its marginal cost to zero or (ii) have to opportunity to produce output before firm 2. Which option would it take and what is the maximum Z it would be willing to pay?
- Suppose we have two identical firms A and B, selling identical products. They are the only firms in the market and compete by choosing quantities at the same time. The Market demand curve is given by P=477-Q. The only cost is a constant marginal cost of $16. Suppose Firm A produces a quantity of 66 and Firm B produces a quantity of 49. If Firm A decides to increase its quantity by 1 unit while Firm B continues to produce the same 49 units, what is the Marginal Revenue for Firm A from this extra unit? Enter a number only, no $ sign. Don't forget to include the negative sign if revenue decreases.1. The market (inverse) demand function for a homogeneous good is P(Q) = 10 - Q. There are two firms: firm 1 has a constant marginal cost of 2 for producing each unit of the good, and firm 2 has a constant marginal cost of 1. The two firms compete by setting their quantities of production, and the price of the good is determined by the market demand function given the total quantity. a. Calculate the Nash equilibrium in this game and the corresponding market price when firms simultaneously choose quantities. b. Now suppose firml moves earlier than firm 2 and firm 2 observes firm 1 quantity choice before choosing its quantity find optimal choices of firm 1 and firm 2.Suppose the Boston to Philadelphia airline route is serviced by three airlines – US Airways (Firm A) and JetBlue (Firm B) and Continental (Firm C). The demand for airline travel between these two cities is Q = 150 – p. The cost function is C(Q) = 30Q. The cost function is the same for all three airlines. Assume that the three airlines are making investments in airline capacity. In other words, they are simultaneously choosing quantity. (Cournot Competition) Derive US Airways’ residual demand function given JetBlue’s output, qB, and Continental’s output, qC. What is the Marginal Revenue for US Airways? Derive US Airways reaction function Derive the market equilibrium quantity, Q*, price, p*, and Profit.
- Economics: Industrial Economics Question: In a market that operates under quantity competition there are 2 firms (Cournot duopoly). The inverse demand function is P = A - B Q. The cost structure of firm 1 is given by C1(q1) = F1 + c1 q1 and that of firm 2 is given by C2(q2) = F2 + c2 q2. Prior to competing, the two firms can engage in research at levels (x1, x2) respectively in order to lower their marginal costs. As a result, marginal costs are c1 = c - x1 - β2x2 and c2= C - x2 - β1 X1. where β1 = β2 > ½. Finally, the research costs are F1 = a1 (x1)^2 /2 and F2 = a2 (x2)^2 /2, where a1 > 0 and a2> 0. 1. The Nash Equilibrium research levels are Choices: A. Higher than the cooperative research levels for both firms. B. Higher than cooperative research levels for firm 1 but lower for... C. Lower than the cooperative research levels for both firms. D. Higher than cooperative research levels for firm 2 but lower for... 2. An increase in the value of a2 would Choices: A.…(5) For each situation, solve for the Bertrand-Nash Equilibrium (differentiated Product). 5a) Suppose Sarah's constant marginal cost is $5 but Joe's is $8 Recall that in a Bertrand model with differentiated product, each supplier faces his/her own demand: Qjoe = 100 – 10 Pjoe + 5 Psarah Qsarah = 100 – 10 Psarah + 5 Pjoe 5b) Suppose Joe and Sarah have the same cost functions as earlier (constant MC of $5) but asymmetric demand functions Qjoe = 100 – 10 Pjoe + 5 Psarah Qsarah = 160 - 10 Psarah + 5 PjoeThere are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?
- 4. In 2056, there are two mining firms operating on the moon, extracting Helium 3. Once both firms have entered the market, they compete a la Cournot. The market inverse demand function is given by P(Q) = 8 - Q. Assume that both firms have the total cost functions C(q) =2+2q. Let the star superscript* denote equilibrium quantities/prices/profits. Which of the following statements is true? (a) q₁ =q2 = 4 (b) qt > 92 (c) p* = 6 (d) π₁ < π₂ (e) T₁ = π = 2 the CThe inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has a cost of production of C1= 15*Q1 and firm 2 has a cost of production of C2=20*Q2 a) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices?What are the profits of firm 1 and 2?b) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices?What are the profits of firm 1 and 2?. The market for widgets consists of two firms that produce identical products. Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms. Firm 2 is known to have a cost advantage over firm 1. A recent study found that the (inverse) market demand curve faced by the two firms is P = 280 – 2(Q1 + Q2), and costs are C1(Q1) = 3Q1 and C2(Q2) = 2Q2. a. Determine the marginal revenue for each firm. b. Determine the reaction function for each firm.