The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 − 3(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2. a. Determine the reaction function for each firm. b. Calculate each firm’s equilibrium output. c. Calculate the equilibrium market price.
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The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 − 3(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2.
a. Determine the reaction function for each firm.
b. Calculate each firm’s equilibrium output.
c. Calculate the
d. Calculate the profit each firm earns in equilibrium.
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- The inverse market demand in a homogeneous-product Cournot duopoly is P = 100 – 2(Q1 + Q2) and costs are C1(Q1) = 20Q1 and C2(Q2) = 30Q2. a. What is the reaction function for each firm? b. What is each firm’s equilibrium output? c. What is the equilibrium market price? d. What is the profit each firm earns in equilibrium?The inverse demand for a homogeneous-product Stackelberg duopoly is P = 16,000 − 4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 4,000QL and CF(QF) = 6,000QF. a. What is the follower’s reaction function? b. Determine the equilibrium output level for both the leader and the follower. c. Determine the equilibrium market price. d. Determine the profits of the leader and the follower.A) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 90 – 3Q. The marginal cost for each firm is €18. Calculate the level of output that each firm would produce at the Cournot equilibrium. B) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 60 – Q. The marginal cost for each firm is €36. What price should Firm 1 charge at the Cournot equilibrium? C) Consider the production function Q = 10KL. Will the MRTS for this production function remain constant along the Q = 200 isoquant? Explain briefly.
- The vertical distance between the average total cost curve and the averagevariable cost curve:(2)(1) Increases as output increases;(2) Decreases as output increases;(3) Is equal to total variable cost per unit of labour;(4) Is negative Q.1.10 Which one of the following is NOT a characteristic of an oligopoly? (2)(1) There are a few sellers and many buyers in the industry;(2) A firm in an oligopolistic market makes pricing decisions without consideringthe other firms in the market;(3) To reduce uncertainty in the market, firms may collude;(4) Barriers to entry is one of the key features of oligopoly.The vertical distance between the average total cost curve and the averagevariable cost curve:Suppose that Raleigh and Dawes are the only sellers of bicycles in the UK. The inverse market demand function for bicycles is P(Y)=200-2Y. Both firms have the same total cost function: TC(Y)=12Y and the same marginal cost: MC(Y)=12. Suppose this market is a Stackelberg oligopoly, and Raleigh is the first mover. Write down a formula for the reaction function of Dawes. Calculate the equilibrium quantity that each firm produces and the equilibrium price in the market. Give typing answer with explanation and conclusionA market is served by two firms in Cournot competition, each with a constant marginal cost of $100. The market inverse demand curve is P = 2,000 – 50 Q, where Q is the total market output produced by the two firms, q 1 + q 2. What is Firm 1's reaction function? A. q1 = 400 – 100q2 B. q1 = 19 – 0.5q2 C. q1 = 400 – 0.2P D. q1 = 210 – q2
- Suppose three firms compete in a homogeneous-product Cournot industry. The market elasticity of demand for the product is −2, and each firm’s marginal cost of production is $50. What is the profit-maximizing equilibrium price?Consider an industry with two firms, each of which has a constant marginal cost of 20. The inverse demand facing this industry is P(Y) = 220 −Y, where Y = y1 + y2 is the total output. 1. What is the competitive level of output? (Recall: price equals marginal cost at the competitive equilibrium.) 2. What is the output of each firm in the Cournot equilibrium? 3. What is the output of each firm in the Stackelberg equilibrium when firm 1 is the follower and firm 2 is the leader?onsider a homogenous good industry with four firms. Total demand is given by D(p)=200-p.The variable (=marginal) cost of each of the firms is c1=10, c2=20, c3=30 and c4=35. Firms compete in prices. Suppose firms 1 and 2 merge into one entity and produce with a marginal cost of 15. Which of the following statements is correct? After the merger, total welfare increases by $500. After the merger, total welfare decreases by $500. After the merger, total welfare increases by $1000. After the merger, total welfare decreases by $1000. None of the above.
- The inverse market demand curve for salmon is given by P(Y) = 100 – 2Y, and the total cost function for any firm in the industry is given by TC(y) = 4y. a. Suppose that two Cournot firms operated in the market. What would be the reaction function for Firm 1 and the reaction function of Firm 2? (Notes: The marginal cost is not zero). If the firms were operating at the Cournot equilibrium point, what would the industry output and price be? b. For the Cournot case, draw the two reaction curves and indicate the equilibrium point on the graphConsider an industry with only two firms: firm A and firm B. The industry’s inverse demand is P(Q) = 400 − 1/10Q where P is the market price and Q is the total industry output. Each firm has a marginal cost of $10. There are no fixed costs and no barriers to exit the market. Suppose that the two firms engage in Cournot competition. Find the equilibrium price in the industry, the equilibrium outputs, as well as the profits for each firm.Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 – 4Q, and each firm has a constant marginal cost of $12 per unit. Let Q; be the output produced by firm i, where i = 1,2. Then, Firm 1's reaction function is A. Q, = 24 - 0.5Q2. B. Q, = 24. %3D C. Q, = 25.5 – 0.5Q2. D. Q, = 24 - Q2. %3D E. None of the above. In the Cournot equilibrium for this market, each firm will produce 16 units of output, and the market price will be $ 76. (Enter your responses as integers.) Each firm will earn a profit of $ 1024 . (Enter your response as an integer.) Suppose that instead of competing as a Cournot firm, Firm 1 decides to announce its production decision before Firm 2 chooses its output. Thus, Firm 1 acts as a Stackelberg firm. Use the same market demand, P = 204 - 4Q, and marginal cost, $12, as before. Firm 1 will produce 24 units, Firm 2 will produce 12 units, and the market price will be $ 60 . (Enter your responses…