1. Two firms compete in a market to sell a homogeneous product with inverse demand function P = 960-6Q. Each firm produces at a constant marginal cost of $60 and has no fixed costs. a. Assuming perfect competition, compute i. Equilibrium price and quantity ii. Profits and producer surplus iii. Consumer surplus and total surplus
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1. Two firms compete in a market to sell a homogeneous product with inverse
demand function P = 960-6Q. Each firm produces at a constant marginal cost of
$60 and has no fixed costs.
a. Assuming
i.
ii. Profits and producer surplus
iii.
b. Assuming Cournot duopoly, compute
i. Reaction functions for each firm
ii. Profits of each firm
iii. Consumer surplus
iv. Total welfare loss relative to perfect competition (if any)
c. Assuming the firms collude and act as a monopolist, compute
i. Equilibrium price and quantity
ii. Total profits
iii. Consumer surplus
iv. Total welfare loss relative to perfect competition (if any)
d. Rank the output quantities, profits, and total welfare by the three market
structures above
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- 1.In differentiated oligopoly,the elasticity of individual market demand is smaller than in the case of pure oligopoly.Explain this statement in not more three sentences 2.As a prospective production manager of an agribusiness firm whose average variable cost of production is greater than the price per unit of its product in a competitive market indicate ,in not more than four sentences, how would you advice management concerning the operations of the firm 3.Assuming you are the production Economist in a farm firm whose elasticity of production is negative indicate,in not more than 3 sentences, how would you advice management concerning the operations of the firmQuestion 4 Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot.Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. Describe what a best-response curve is and how to find it. Derive the best-response function for each firm. What are the equilibrium quantities? What is the total quantity supplied on this market? What is the equilibrium price in this market?In the mobile phone market, Samsung and Apple constitute a duopoly in the production of devices.The American firm has the following demand q_a = 10 - p_a + 0.25p_s, and the Korean firm, q_s = 20 -p_s+ 0.5p_a. Because both firms assembly their devices in China, their cost structure is the same andequal to ?(q) = 10q, answer the following questions.a) What would be the equilibrium (quantity, price, and profit) in this market, and interpret youranswer.b) If they decide to form a cartel, what are the new quantities, prices, and profits?
- only typed answer The inverse demand for a homogeneous-product Stackelberg duopoly is P = 26,000 −4Q. The cost structures for the leader and the follower, respectively, are CL(QL) = 2,000QL and CF (QF) = 4,000QF. a. What is the follower’s reaction function? QF = − QL b. Determine the equilibrium output level for both the leader and the follower. Leader output: Follower output: c. Determine the equilibrium market price. $ d. Determine the profits of the leader and the follower. Leader profits: $ Follower profits: $Answer the given question with a proper explanation and step-by-step solution. The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 – 2(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2. Firm 1: Q1 = ? - Q2Firm 2: Q2 = ? - Q1 b. Calculate each firm’s equilibrium output.Firm 1:Firm 2: c. Calculate the equilibrium market price.$ d. Calculate the profit each firm earns in equilibrium.Firm 1: $Firm 2: $Two firms facing a demand curve are P = 50 -5Qwhere Q = Q1 + Q2. The cost functions of the two firms are:C1(Q1) = 20 + 10Q1C2(C2) = 10 + 12Q2Based on this information:a. Suppose both companies have entered the industry, then what is the price?and the profit-maximizing amount for the two firms under conditionsperfectly competitive market?b. What is the quantity, price and profit of the two firms ifcompanies collude in pricing?c. What are the quantities, prices, and profits of the two firms if theydo the Cournot strategy, and draw the reaction curves of the twothe company?d. What are the quantity, price, and profit of the two firms if theycarry out the stakeberg strategy.
- Please solve all the parts and only typed answer 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. What is the follower’s reaction function? Determine the equilibrium output level for both the leader and the follower. Leader output: Follower output: Determine the equilibrium market price. Determine the profits of the leader and the follower. Leader profits: Follower profits:Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P, where P is the price on the market. Q is total market output, i.e., Q = QA + QB, where QA is the output by Firm A and QB is the output by Firm B. For both firms, marginal cost is given by MCi = 20, i=A,B. Assume the firms compete a la Cournot. a) Find the inverse demand in this market. Note that marginal revenue for both firms is given by MRA=500-2QA-QB, MRB=500-QA-2QB. b) Describe what a best-response curve is and how to find it. c) Derive the best-response function for each firm. d) What are the equilibrium quantities? e) What is the total quantity supplied on this market? f) What is the equilibrium price in this market? **if possible, please answer my questions in typing as its hard for me to read works in hand-written, thanksStatement refers to partial equilibrium model of monopoly and oligopoly. In an industry with a single producer of a good, an increase in the number of firms operating in that industry (due to trade) will benefit the consumers, is this true, false or uncertain
- The inverse demand for a homogenerous-product STakelberg duopoly is P=18,000-5Q. The cost structures for the leader and the follower, respectively, are CL(QL=2,000QLand CF(QF)=4000Qf. What is the follower's reaction function? Determine equilibrium output level for both leader and follower. Determine the equilibrium market price. Determin the profits of the leader and the follower. Please answer correct please asap please Don't answer by pen paper plzonsider 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.Practice Problem 1: Two firms produce homogeneous goods with constant marginal costs c = 2. The market demand in each period is P(Q) =10 - Q where Q is output. (a) Compute Cournot (quantity competition) profits in this market (for which you need to compute output and prices, of course).(b) Compute the monopoly profit in this market. That is, what a firm with the same cost function would make if it were the only one in the market (and what a cartel of the two firms would decide to produce in this market).(c) Suppose that one firm produces half the output that you computed in (b). Compute the best response of the other firm, and explain why in one period an agreement between the two firms to produce each half the monopoly output (and so get half the monopoly profit) would not be honored..