Assume a Nash-Cournot equilibrium. How much output does firm 1 produce? Assume a Nash-Cournot equilibrium and no fixed cost. How much profit does firm 2 make? Now assume a collusive equilibrium. What is firm 1's output?

Assume a Nash-Cournot equilibrium. How much output does firm 1 produce? Assume a Nash-Cournot equilibrium and no fixed cost. How much profit does firm 2 make? Now assume a collusive equilibrium. What is firm 1's output?

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter9: Monopolistic Competition And Oligoply

Section: Chapter Questions

Problem 19SQ

See similar textbooks

Related questions

Q: 1.1. Optimal pricing. There two consumers, Alice and Bob, and two kinds of products A and B. Alice…

A: The technique or strategy a company or organization takes to decide the prices for its goods and…

Q: s fabricated metal products, the Able Corp is paying $10,000 for special tools that have a 4-year…

A: Salvage value, also known as residual value, It refers to the estimated worth in monetary sense of…

Q: Which z-values correspond to the top 19% of the standard normal distribution? Round your answer to…

A: In this question, we were asked to find the z-value that corresponds to the top 19% of the standard…

Q: 2. A firm uses capital (K) and labour (L) to produce luxury office chairs. The production technology…

A: A production function is a mathematical representation that shows the relationship between inputs…

Q: What went economically wrong in the Central Eastern European states and in the USSR?

A: Economic structures are a number of approaches through which communities arrange and distribute…

Q: If a firm has a production function of the form: Q = LK³, what can we conclude? The firm has convex…

A: A production function is an economic idea that depicts the relationship between inputs (elements of…

Q: Describe a situation where you experienced a positive or negative externality or free-riding by you…

A: Externality refers to the cost or benefit that is incurs by a third person or group that is not…

Q: PRICE (Dollars per headset) 350 315 280 245 210 175 140 105 70 35 0 0 Demand Supply 40 80 120 100…

A: The overall benefit or value generated by an economic transaction or activity is termed 'total…

Q: For the year ending December 31, 2017, sales for Company Y were $61.21 billion. Beginning January 1,…

A: To calculate the amount of money in the investment account on December 31, 2020, we need to…

Q: During a coffee-room debate among several young MBAs who had recently graduated, one of the young…

A: Cost estimation empowers businesses to uncover situations wherein expenses could potentially be cut…

Q: Suppose that identical duopoly firms have constant marginal costs of $20 per unit. Firm 1 faces a…

A: Demand schedule is the tabular representation of quantity demanded at various price level. Demand…

Q: Perfectly competitive firms can incur economic losses in the short run. If you are not sure about…

A: A perfectly competitive market has a large number of firms selling identical goods.

Q: You have been asked to evaluate two alternatives, X and Y, that may increase plant capacity for…

A: Alternative XAlternative YFirst cost-25,000-80,000Maintenance cost (per year)-13,000-7000Salvage…

Q: 7. = A firm's production function takes the form: Q (L, K) = min {4L, K}, where Q represents output…

A: Marginal cost is the change in total cost incurred by producing an additional unit of the good.

Q: (1) A company production function Is Q = 15K^1.7 L^1.3, + K^3 + 5^3, where Q is the quantity…

A: A production function is an economic concept that represents the relationship between inputs (such…

Q: An industry produces its product, Scruffs, at a constant marginal cost of $50. The market demand for…

A: Under a monopoly, a single seller faces the entire market demand on his own. Here, the seller…

Q: For Perfect competition markets, determine whether there is market supply curve or not. If yes, how…

A: Perfect competition market refers to the market scenario in which there are many sellers and buyers.…

Q: SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.…

A: GDP or gross domestic product is the sum of the value of all end commodities…

Q: has a xed cost of $200 000. What will uns optimal decision be, and what will be the resulting market…

A: .

Q: Show the effect this shock has on the market for cashews by shifting the demand curve, supply curve,…

A: Given diagram shows the condition of market Equilibrium.

Q: In the figure, at a temporary price of $4... Price: per Unit $4 $3 $2 0 S D Quantity O A. the demand…

A: Price floor is the minimum price that must be paid to sellers. It is efficient when it is charged…

Q: In the accompanying labor supply and labor demand figure, the price is the wage, and the quantity…

A: Since you have posted multiple questions, we will provide the solution to only the first question as…

Q: A monopoly confronts the (market) inverse demand function Pp(q) = The monopoly's ost of producing q…

A: Monopoly firm produces where the MR=MCMonopoly firm is price maker. It can earn supernormal profit…

Q: Use the information in the following table to calculate Nominal Gross Domestic Product (Nominal GDP)…

A: Nominal GDP, or Gross Domestic Product, refers to the sum of the product of final goods price and…

Q: 22. Suppose a firm has a production technology given by the Cobb-Douglas production function:…

A: GivenProduction function: L represents labor, K represents capital and A represents…

Q: by a player is kept by that player. Money allocated to the public account d by 1.5, and then…

Q: Charles is a volunteer fire fighter living in San Diego who coaches youth soccer to supplement their…

A: Elasticity in economics means to the responsiveness or sensitivity of demand or supply to changes in…

Q: Poverty profiles can play an important role in understanding poverty and formulating poverty…

A: Poverty can be defined as a condition portrayed by an absence of material resources, like income,…

Q: Price 20 15 10 5 Market for Widgets Supply Demand 5 10 15 Suppose a price ceiling of $5 is placed on…

A: Price ceiling is the maximum price that can be charged. It is binding if it is set below the…

Q: Wichita — Farmers in Kansas, the biggest US producer of wheat, are abandoning their crops damaged by…

A: Demand refers to quantity of a goods or service that a consumer is willing and able to buy at a…

Q: Tourists Local government Local residents Government

A: Title: The Roles and Relationships of Tourists, Local Government, Residents, and Government Tourist…

Q: Ab 57 Economics

A: Cash Flow Table for question (i):YearCash InflowCash…

Q: The output of a production process, Q is given by the function 2K^(-3)L^(5/2)/2K log4 6L^2 where K…

A: ***Since, Lagrange cannot be used to solve this equation, so the expert has solved the production…

Q: Is the following statement true or false? Explain your answer with the help of diagrams where…

A: Money is a medium of exchange. It replaced the barter system of exchange. It is the easiest medium…

Q: imal allocations maximise total surplus (utility) and eakly prefer this allocation over any other? s…

A: (d) To determine the Pareto optimal allocations that maximize total surplus, we need to find the…

Q: Priest and Sons, a local manufacturer of a product that sells for $13.50 per unit. Variable cost per…

A: Break-even analysis is a financial tool used by businesses to determine the point at which their…

Q: Maintenance money for an athletic complex has been sought. Mr. Kendall, the Athletic Director, would…

A: Maintenance cost refers to the expenses incurred to preserve and sustain the functionality and value…

Q: Which one of the following statement is incorrect? Under prefect competition In the long run, an…

A: Factors of production are the resources or inputs used in the production process to create goods and…

Q: Suppose there is a decrease in ?t. a) Analyse the short-run effects (on prices, wage, employment,…

Q: Consider point A on the supply curve at right. Use the line drawing tool to draw another…

A: Price Elasticity of supply tells how much sensitive is quantity supplied to price change.…

Q: Japan has a 282% tariff on rice, and Switzerland has a 138% tariff on dairy products. Japan's…

A: Sometimes the govt of an economy imposes certain trade barriers to protect the economy and control…

Q: The type of unemployment that is associated with labor market frictions or job search is referred to…

A: Frictional unemployment refers back to the temporary duration of unemployment that takes place when…

Q: Suppose that a consumer has the utility function U(X,Y)= x2 + y² for X20 and Y≥ 0. Which of the…

A: A utility function is a mathematical representation that assigns a numerical value to various…

Q: Fill in the production plan table below (enter your responses rounded to the nearest whole number)

A: Forecasted sales= already given to usSales in worker hours= Forecasted sales*Hours per…

Q: 3. The (market) inverse demand function for a good is as follows: Pp(q) = {12-2q if g € (0,6], if q>…

A: In duopoly, we find the best response of both firms by using the optimal conditionMarginal Revenue,…

Q: Wine A B F E с Bread D Refer to Figure 2-1. The most inefficient point depicted is: Point A Point C…

A: PPF is the production possibility frontier. The PPF is the production possibility of two goods in an…

Q: We've put tariffs on Chinese goods and China is paying." (Donald J. Trump) Critically evaluate…

A: A tariff is a tax or duty forced by a government on goods and services that are imported or…

Q: Graphically illustrate using the Supply and demand graph and explain the impact of the severe…

A: Demand refers to quantity of a goods or service that a consumer is willing and able to buy at a…

Q: Wayne's Wiener Wagon Assignment 1. Complete the following table for Wayne's Wiener Wagon. Weenies 0…

A: Total Cost is the sum of both the fixed and variable costs .Fixed cost is independent of the…

Q: Residents of two districts, Oz and Wonderland, initially fall into two types: blue (B) and red (R).…

A: The Tiebout model is a framework for analyzing how well local public goods are provided through…

Question

Please help me ASAP. I will really appriciate it. Thank you

Assume a Nash-Cournot equilibrium. How much output does firm 1 produce?

Assume a Nash-Cournot equilibrium and no fixed cost. How much profit does firm 2 make?

Now assume a collusive equilibrium. What is firm 1's output?

A homogeneous-good duopoly faces an inverse market demand function of p = 110-1/Q. Firm 1
has a constant marginal cost of MC₁ = 30. Firm 2's constant marginal cost is MC₂ = 40.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Defining Cournot Duopoly.

VIEW

Step 2: Finding the BRFs and estimating the profit of Firm 2.

VIEW

Step 3: If the firms collude, what is the output of Firm 1?

VIEW

Solution

VIEW

Step by step

Solved in 4 steps with 11 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Consider a Duopoly model, in which two firms decide a quantity simultaneously. The market demand is given by P=50 - Q, where Q is the total output (Q=Q1+Q2). Each firm has an identical cost function, TCi=6Qi, i=1, 2. If Firm 1 believes Q2=10, Firm 1 should sell Q1= ____ units in order to maximize its profit.
A homogeneous product duopoly faces a market demand function given by p = 300 - 3Q,where Q = q1 + q2. Both firms have constant marginal cost MC = 100. What is the Bertrand equilibrium price and quantity in this market?
Consider a Duopoly model, in which two firms decide a quantity simultaneously. The market demand is given by P=120 - 3Q, where Q is the total output (i.e., Q=Q1+Q2). Each firm has an identical cost function, TCi=12Qi, i=1, 2. If Firm 1 believes Q2=12, Firm 1 should sell Q1= _____ units in order to maximize its profit.
Q. Three firms operate in a market with a Demand function p = 169 - 2Q. All three firms have identical Cost functions: TC = 1200 - 95q + 2q2.i) Given that the firms are able to collude, what is the equilibrium market price and output?ii) If all of the firms cheat and each increases output by two units, what would be the new equilibrium price and the impact on an individual firm’s profits?
Two identical firms currently serve a market. Each has a cost function of C(q) = 30q. Market demand is P(Q) = 80 − 0.01Q. The firms compete by setting prices simultaneously as in Bertrand competition. Let PB represent the equilibrium Bertrand duopoly price.The firms have proposed to merge, and they announce that this merger will result in considerable cost savings. The firms’ new cost function will have the form Cm(q) = cq + 100, 000. Note that the merged firm has positive fixed costs while the unmerged firms do not. (a) What is the merged firm’s profit-maximizing price if the merger is approved? Is it possible for the cost savings (via c < PB) to be sufficiently large for the merged firms’ profit-maximizing price to be below the duopoly equilibrium price? (b) Suppose that the Department of Justice permits the merger with the requirement that the new (post-merger) price must be no greater than the pre-merger price. Under what circumstances are the firms willing to go through with…
Consider a market that is a Bertrand oligopoly with 5 firms in the market. Each of these firms produce an identical product and each have the same cost function of C(Q) = 80Q. The inverse market demand for this product is P = 2480 – 2Q. How much does EACH firm produce at the equilibrium price?
Consider a Bertrand duopoly. Both firms produce an identical good at the same constant marginal cost of $0.80. Demand is given by Q=100−P. If the two firms charge the same price, they share market demand equally. The firms are located in Singapore, where the smallest currency denomination is $0.05. The firms thus can only choose prices in increments of $0.05. a) Suppose that both firms choose the same price, P. What is the profit of a firm as a function of P? b) Now suppose that one firm unilaterally deviates from the arrangement in (a) by charging a price $0.05 lower than P. What is that firm’s profit as a function of P? c) A Nash equilibrium occurs when no firm has an incentive to deviate by lowering its price. Using your answers in (a) and (b), set up an inequality that characterizes the Nash equilibrium. Then solve for the Nash equilibria in this game. (Hint: there are three equilibria)
A homogeneous products duopoly faces a market demand function given byP = 300 − 3Q, where Q = Q1 + Q2. Both firms have a constant marginal cost MC =100. what is the profit-maximizing quantity?
Consider a market that is a Bertrand oligopoly with 5 firms in the market. Each of these firms produce an identical product and each have the same cost function of C(Q) = 80Q. The inverse market demand for this product is P = 2480 – 2Q. What is the equilibrium market price?
Consider a two-firm duopoly facing a linear demand curve: P=1,600-Q. Assume MCA=MCB=AC=100 Where: P= Price Q= total output of the market, thus Q=QA+QB a. find the profit-maximizing output( cournot equilibrium output) b. find the cournot equilibrium price of firm A and firm B. 3. discuss how agricultural insurance could help farmers improve farm activity.
Suppose a market is served by two firms (a duopoly). The market demand function given by P = 1200 - Q_{1} - Q_{2} where Q_{1} is the output produced by firm and Q_{2} is the output produced by firm 2 . Firm cost of production is given by the function C(Q_{t}) = 120Q_{t} and firm 2's cost of production is given by the function C(Q_{2}) = 120Q_{2} The average cost of firm 1 is given by A*C_{1} = 120 and the average cost of firm 2 is given by A*C_{2} = 120 Marginal profit function for firm 1: Delta pi 1 Delta Q 1 equiv1080-2Q 1 -Q 2; (d*pi_{2})/(Delta*Q_{2}) = 1080 - Q_{1} - 2Q_{2} Marginal profit function for firm 2: What will be the equilibrium profit levels earned by the Stackelberg leader firm and the Stackelberg follower firm?
A duopoly faces an inverse market demand of P(Q) = 150−Q.Firm 1 has a constant marginal cost of MC1 (q1) = $30.Firm 2's constant marginal cost is MC2 (q2) = $60.Assume fixed costs are negligible for both firms. Calculate the output of each firm, market output, and price if there is (A) a collusive equilibrium or (B) a Cournot equilibrium. (A) Collusive equilibrium (Enter your responses rounded to two decimal places) The collusive equilibrium occurs where q1 equals ?and q2 equals ? Market output is ? The collusive equilibrium price is ? (B) Cournot equilibrium (Enter your responses using rounded to two decimal places) The Nash-Cournot equilibrium occurs where q1 equals ? and q2 equals ? Market output is ? The equilibrium occurs at a price of ?