Consider a market for crude oil production. There are two firms in the market. The marginal cost of firm 1 is 20, while that of firm 2 is 20. The marginal cost is assumed to be constant. The inverse demand for crude oil is P(Q)=200-Q, where Q is the total production in the market. These two firms are engaging in Cournot competition. Find the production quantity of firm 1 in Nash equilibrium. If necessary, round off two decimal places and answer up to one decimal place.
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Consider a market for crude oil production. There are two firms in the market. The marginal cost of firm 1 is 20, while that of firm 2 is 20. The marginal cost is assumed to be constant. The inverse
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- Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q₁ = 40-3P₁+ P2 1 Firm 2: Q₂ = 40 -3P 2+P1 Both firms have constant marginal costs of $4.70 per unit. Both firms set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equilibrium set of prices. Since the firms are identical, they will set the same prices and produce the same quantities. In equilibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to two decimal places.) Each firm will earn a profit of $ (Enter your response rounded to two decimal places.)Two countries produce oil. The per unit production cost of Country 1 is C1 = $2 and of country 2 it is C2 = $4. The total demand for oil is Q = 40-p where p is the market price of a unit of oil. Each country can only produce either 5 units, 10 units or 15 units. The total production of the two countries in a Nash equilibrium is 10 15 20 25 30Consider that Firm 1 and Firm 2 are involved in price competition. The demand for each firm is given as follows, where Xj denotes the demand for firm i=1,2 and Pi denotes the price that firm i=1,2 chooses. X1=465-3P1+P2 X2=465-3P2+P1 For each firm, it costs 5 to produce a product. At the Nash equilibrium, the price of Firm 1 is Blank 1. Calculate the answer by read surrounding text. , and the price of Firm 2 is Blank 2. Please answer Blank 1 and Blank2.
- Consider an industry with two identical firms (denoted firm 1 and 2) producing a homogenous good. Firms compete in quantities. Firm 1 has a constant marginal cost of 20. Firm 2 has a constant marginal cost of 80. Demand in the industry is given by D(p) = 380 - p. Let q1 and 92 denote the quantities of firm 1 and 2, respectively. Derive the Nash equilibrium in quantities. What is the total production in this industry?Two firms, A and B, sell the same good X in a market with total demand Q = 100 – P. The two firms compete on quantities and decides how much to produce simultaneously. Firm A cost function is C(qA) = 40qA. Firm B cost function is C(qB) = 60qB. 1. Find the best reply functions of both firms and represent them in a graph. 2. Find the quantity produced by each firm in a Nash equilibrium. 3. Find the firms and consumers surplus. 4. Compare the surplus of firms found above with the surplus arising when both firm cooperate to sustain a monopoly outcome. 5. Assume now that A and B compete as in a Stackelberg model. A chooses first and B chooses after observing the choice of A. Find equilibrium quantities produced by each firm and the market equilibrium price.Two firms compete in selling identical widgets. They choose their output levels Q1 and Q2 simultaneously and face the demand curve P = 30 - Q where Q = Q1 + Q2. Until recently, both firms had zero marginal costs. Recent environmental regulations have increased Firm 2’s marginal cost to $15. Firm 1’s marginal cost remains constant at zero. TRUE-FALSE: Is the following statement true of false? ”As a result, the market price will rise to the monopoly level.” Solve for the Cournot equilibrium and write a convincing explanation of your answer.
- Consider two firms with a homogeneous product who face the market demand function p = 2 – q1 – 92, where q; and p are the quantities and price. Their constant marginal costs are given by c= 1. The firms compete in quantities in a simultaneous move game. Use this specific example (not a general case) to show that the Nash equilibrium is not Pareto efficient, and the cooperative solution is not an equilibrium (in the sense that both firms have an incentive to cheat). In your answer, use the fact that the firms are identical. Namely, they produce equal amounts (both in the simultaneous move game and in the cooperative case).Firm 1 and firm 2 compete with each other by choosing quantities. The market demand is given by P(Q) = ( 300 − Q, if Q < 300) (0, otherwise), where Q = q1 + q2. Firm 1 has a cost function C1(q1) = 40q1, and firm 2 has a cost function C2(q2) = 50q2. Answer the following questions. 1. Assume the game lasts only one period. Compute the equilibrium price, quantities and profits for both firms. 2. If firm 1 becomes the monopolist on this market, what quantities will firm 1 choose to produce? Denote this quantity as QM. 3. One possible strategy is that each firm produces QM 2 . Would the resulting outcome be better for both firms (Pareto improvement)? Explain why this is not the equilibrium in the one period game. 4. Assume this game is infinitely repeated and the interest rate in this economy is r. For what values of r the strategy in (3) is sustainable by using a “Grim Trigger” strategy?Two firms produce and sell differentiated products that are substitutes for each other. Their demand curves are Firm 1: Q, = 40 - 3P,+ P2 Firm 2: Q, = 40 - 3P2+ P, Both firms have constant marginal costs of $3.10 per unit. Both firms set their own price and take their competitor's price as fixed. Use the Nash equilibrium concept to determine the equilibrium set of prices. Since the firms are identical, they will set the same prices and produce the same quantities. In equilibrium, each firm will charge a price of $ and produce units of output. (Enter your responses rounded to two decimal places.)
- QUESTION 10 Suppose there are two firms that produce an identical product. The demand curve for the product is given by P = 62 - Q where Q is the total quantity produced by the two firms. Both firms choose their individual quantities qı20 and q22 0 simultaneously. Each firm has a marginal cost of 37. What is the market price when both firms produce the quantities in the unique Nash equilibrium? Give your answer as a number to two decimal places.Two firms compete by choosing price. Their demand functions are and Q₂ =20+P₁-P2₁ where P₁ and P₂ are the prices charged by each firm, respectively, and Q₁ and Q₂ are the resulting demands. Note that the demand for each good depends only on the difference in prices; if the two firms colluded and set the same price, they could make that price as high as they wanted, and earn infinite profits. Marginal costs are zero. Suppose the two firms set their prices at the same time. Find the resulting Nash equilibrium. What price will each firm charge, how much will it sell, and what will its profit be? (Hint: Maximize the profit of each firm with respect to its price.) Each firm will charge a price of $1. (Enter a numeric response rounded to two decimal places.) Each firm will produce units of output. In turn, each firm will earn profit of $ Suppose Firm 1 sets its price first and then Firm 2 sets its price. What price will each firm charge, how much will each sell, and what will be profits?…Consider two firms that produce the same good and compete setting quantities. The firms face a linear demand curve given by P (Q) = 1 − Q, where the Q is the total quantity offered by the firms. The cost function for each of the firms is c(qi) = cqi, where 0 < c < 1 and qi is the quantity offered by the firm i = 1,2. Find the Nash equilibrium output choices of the firms, as well as the total output and the price, and calculate the output and the welfare loss compared to the competitive outcome. How would the answer change if the firms compete setting prices? What can we conclude about the relationship between competition and the number of firms?