Suppose that the market demand function is given by Q=200-P, where Q is the total market quantity and P is the market price. Assume that TC = 40Q. Answer each of the following (a) Compute the equilibrium price, and quantity under perfect competi- tion. (b) Compute the equilibrium price, quantity, under a monopoly. (c) Compute the equilibrium quantity, price, and profit under a Cournot duopoly. (d) Compute the equilibrium quantity, price and profit under a Stackelberg model where Firm 1 is the Leader and Firm 2 is the Follower.
Suppose that the market demand function is given by Q=200-P, where Q is the total market quantity and P is the market price. Assume that TC = 40Q. Answer each of the following (a) Compute the equilibrium price, and quantity under perfect competi- tion. (b) Compute the equilibrium price, quantity, under a monopoly. (c) Compute the equilibrium quantity, price, and profit under a Cournot duopoly. (d) Compute the equilibrium quantity, price and profit under a Stackelberg model where Firm 1 is the Leader and Firm 2 is the Follower.
Chapter25: Monopoly
Section: Chapter Questions
Problem 3E
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Transcribed Image Text:Question 1
Suppose that the market demand function is given by Q=200-P, where Q
is the total market quantity and P is the market price. Assume that TC = 40Q.
Answer each of the following
(a) Compute the equilibrium price, and quantity under perfect competi-
tion.
(b) Compute the equilibrium price, quantity, under a monopoly.
(c) Compute the equilibrium quantity, price, and profit under a Cournot
duopoly.
(d) Compute the equilibrium quantity, price and profit under a Stackelberg
model where Firm 1 is the Leader and Firm 2 is the Follower.
(e) Now suppose that TC₁ = 2q₁ and TC₂ = . Compute the equilibrium
quantity, price and profit under a price leadership model where Firm 1
is the Leader and Firm 2 is the Follower.
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