An economy has two producers for a good that has the demand Q = 30 – P. The firms may operate under duopoly or as a cartel with market price of Pp and Pc respectively. Assume that both firms do not incur any variable cost. Which of the following is (are) correct? Select one or more: a. PD = Pc b. 3PD = 4Pc c. 2P) = 3PC d. 3PD = 2Pc
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Q: Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P,…
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Q: Consider a duopoly market with 2 firms. Aggregate demand in this market is given by Q = 500 – P,…
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- 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?ASAP Bertrand competition with differentiated goods. Firms 1,2 with demand functions Q1 = 10 – 3P1 + 2P2 , Q2 = 10 – 3P2 + 2P1 and marginal costs C1 = 6, C2 = 4. i) Find the Nash Equilibrium prices, quantities and individual profits. ii) The firms agree to form a cartel. Find the prices, quantities, cartel profits and individual profits under the cartel agreement. iii) Which firm has a reason to suggest the cartel, and is the cartel sustainable or not? Depict and explain the cartel game in an appropriate way. If it is sustainable, explain. If no, explain and suggest a mechanism that can make it sustainable a) if the deal is for one period only b) if the deal is renewed each period over 5 periods.Consider a hypothetical demand schedule for monosodium glutamate (MSG). Suppose that Ajinomoto holds 50% of the market, Jiali holds 30% of the market, and Quingdao holds 20% of the market. Suppose the three firms agree to form a cartel to fix production of monosodium glutamate. Assume marginal cost equals zero, and the output is split equally across the firms. Price of MSG ($ per pound) Quantity of MSG demanded (millions of pounds) $8 0 $7 20 $6 30 $5 40 $4 60 $3 90 $2 110 $1 180 $0 300 What quantity maximizes the cartel's profit? a.110 million pounds b.90 million pounds c.300 million pounds d.20 million pounds Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero. How would this affect the incentive of Ajinimoto to act noncooperatively and change its output? a.Ajinomoto will have an incentive to increase its output of MSG. b.Ajinomoto will not have an incentive to change its…
- The table shows the demand schedule for a particular product. Quantity Price 0 100 300 90 600 80 900 70 1200 60 1500 50 1800 40 2100 30 2400 20 2700 10 3000 0 Suppose the market for this product is served by two firms who have formed a cartel and are colluding to set the price and quantity in this market. If the marginal cost to produce this product is constant at $40 per unit, then what price will the cartel set in this market? a. $40 b. $50 c. $60 d. $70 e. $80Question 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?Consider a duopoly market with 2 firms. Aggregate demand in this market is given byQ = 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. hi, can you answer part a.b,c please. If possible, please answer this question in typing as i can't read hand -written answers, thanks
- Consider a duopoly market with 2 firms. Aggregate demand in this market is given byQ = 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. 1. 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. 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?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, thanksWould it be answer 1? Imagine a duopoly in which two firms, A and B, produce the monopoly profit-maximizing output and equally share the economic profit. If firm A increases output, 1)both firms' profits increase. 2)firm A's profits increase and firm B's profits decrease. 3)firm B's profits increase and firm A's profits decrease. 4)both firms' profits decrease. 5)firm A's profits increase and firm B's profits do not change.
- Suppose, Pfizer Company is the only company allowed by the Sultanate government to sell COVID vaccine in Oman. According to you, what type of market Pfizer Company is having in Oman? a. Monopoly market b. Monopolistic market c. Competitive market d. Oligopoly marketConsider an industry with two firms, each having marginal costs and total costs equal to zero. The industry demand is P = 100 − Q where Q = Q1 + Q2 is total output. 7. Now, assume that players interact infinitely. Hence the game is an infinitely repeated game. Is it possible to have cartel as an outcome using tit-for-tat? If yes, give the condition on the discount factor for which cartel is sustainable. Cartel is a sustainable outcome of the repeated game if while firm 2 plays grim-trigger, there exists no profitable one-shot deviation from tit-for-tat for firm 1. Sicne the firms are identical, you don't need to check the profitable deviations of firm 2. They will be the same. Let's start with completing the table below. Keep in mind that firm 2 is following tit-for-tat and firm 1 is deviationg from tit-for-tat only in period 2. 8. Now, using the discount factor δ calculate the total payoffs from the two cases. You will need to use formulas for infinite series. Now, find δ values…The table shows a hypothetical demand schedule for monosodium glutamate (MSG). Ajinomoto holds 5050% of the market, Jiali holds 3030% of the market, and Quingdao holds 2020% of the market. Suppose the three firms agree to form a cartel to fix production of monosodium glutamate. Assume marginal cost equals zero, and the output is split equally across the firms. What quantity maximizes the cartel's profit? Price of MSG ($ per pound) Quantity of MSG demanded (millions of pounds) $8$8 00 $7$7 2020 $6$6 3030 $5$5 4040 $4$4 6060 $3$3 9090 $2$2 110110 $1$1 180180 $0$0 300300 million pounds million pounds Suppose Ajinomoto's marginal cost remains equal to zero, but for Jiali and Quingdao, marginal costs rise above zero. How would this affect the incentive of Ajinomoto to act noncooperatively and change its output? Ajinomoto will not have an incentive to change its output. Ajinomoto will have an incentive to increase its output of MSG.…