The market for knitted scarves at a local, weekend farmers' market is a Stackelberg duopoly. Sammy's Scarves acts as the Stackelberg leader and Knitting Nancy as the Stackelberg follower. Both Sammy and Nancy know that the market demand for knitted scarves atthe farmers' market is:Q=320-4Pwhere Q is the quantity of knitted scarves demanded and P is the price of a knitted scarf. Solving the market demand for P as a function of Q gives the inverse market demand:P-80-0.25Q.Sammy produces qs knitted scarves, and Nancy produces q knitted scarves. Each incurs a total cost of producing q; knitted scarves ofTC (91)==30+20qSammy will sell 140 knitted scarves and Nancy will sell 70 knitted scarves at the local, weekend farmers' market.

References; Fiez, T., Chasnov, B., & Ratliff, L. J. (2019). Convergence of learning dynamics in…

Answered: The market for knitted scarves at a…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.4P: Suppose the market for Hula Hoops is monopolized by a single firm. a. Draw the initial equilibrium...

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2. The market for dark chocolate us characterized by Cournot duopolists - Honeydukes and Wonka industries. The market demand for dark chocolate is:P = 8 - 0.005Qdwhere P is the price per bar in dollars and Qd is dark chocolate's daily quantity demanded in bars (use qh to represent the quantity of dark chocolate sold by Honeydukes and qw to represent the quantity of dark chocolate sold by Wonka Industries). Honeydukes has a constant marginal cost of $2.50 per bar, while Wonka Industries has a constant marginal cost of $3.00 per bar. The firms move simultaneously in choosing their profit-maximizing quantity of output.a. Given the firms move simultaneously, what is the equation for Honeydukes' reaction function with qh expressed as a function of qw?b. Given the firms move simultaneously, what is the equation for Wonka's reaction function with qw expressed as a function of qh?c. What quantity of dark chocolate will each firm produce in equilibrium and what price will be established for a…
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Which of the following is shared by both monopolistically competitive markets and prefectly competitive markets?
What is a two-part tariff? Why do firms sometimes use them? What is an example of a firm that uses a two-part tariff as part of its pricing strategy?
What is predatory pricing?
Suppose now that Clomper's is able to perfectly price discriminate that is, it knows each consumer's willingness to pay for a pair of Stompers and is able to charge each consumer precisely that amount. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing quantity sold and the lowest price at which the firm sells its boots. Next, use the purple points (diamond symbol) to shade the profit, the green points (triangle symbol) to shade the consumer surplus, and the black points (plus symbol) to shade the deadweight loss in this market with perfect price discrimination. (Note: If you decide that consumer surplus, profit, or deadweight loss equals zero, indicate this by leaving that element in its original position on the palette.) ? PRICE(Dollars per pair of Stompers) 100 90 80 70 60 50 40 30 20 10 0 MC = ATC Demand 0 200 400 600 800 1000 1200 1400 1600 1800 2000 QUANTITY (Pairs of Stompers) Monopoly Outcome Profit A Consumer Surplus Deadweight Loss…
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