Assume that there are two firms in the market described by the inverse demand function P(q1,q2)%3D186 - (2/2)(q1+q2). Firm 1 has marginal costs of 51 and decides on first. Firm 2 has marginal costs of 62 and moves second. Both firms decide on quanties once. How much does firm 1 produce in equilibrium?
Q: o- 500 – 100P where Q is the number of songs demanded per hour and Pis the price of downloading a so...
A:
Q: Consider the following payoff matrix, where the first entry is the payoff for the row player. B L R ...
A: "Nash equilibrium is an equilibrium in game theory representing the set of strategies that players c...
Q: Consider the case in which the LM schedule is vertical. Suppose there is a shock that increases the ...
A: In this case, LM schedule is vertical. At point E0, where IS meets with LM, equilibrium is attained...
Q: The maximum carrying capacity of a park is 100 animals. Currently, there are 10 animals in the park....
A:
Q: Explain and Expound in your own Word (150-200 words only) The Impact of Globalization in the Philip...
A: Globalization is described as the integration of nations via international commerce and multinationa...
Q: Assume throughout that an individual's demand curve for doctors visits is represented by Q = 50 – P....
A: Market refers to the place where the buyers and sellers exchange goods and services in the market. I...
Q: QUESTION 28 Fl in the blank using the number that corresponds to the correct word or phrase in the w...
A: The emphasis on opportunity cost, the assumption of maximization in terms of one's own self-interest...
Q: passage Drag word(s) below to fill in the blank(s) in the passage. Improving enables a country to ha...
A: The term human capital refers to the economic value of a worker's experience and skills. Human capit...
Q: Explain the effects of the following statements to the equilibrium of supply and demand. Use supply-...
A: Equilibrium of supply and demand basically refers to a situation when the demand of a commodity is e...
Q: One way that Bismarck nations control costs is through government-set prices for care. True False
A: Bismarck model is a health care system where people deposit some fee in a fund for the purpose that ...
Q: Consider a monopoly with the following marginal cost and demand curves: MC = 2Q + 200, p = 2,600 – 2...
A: For first price discrimination, the monopoly firm is able to charge prices equals to the consumers w...
Q: Compute the expected return given these three economic states, their likelihoods, and the potential ...
A: Answer: Given, Economic state Probability Return (%) Fast growth 0.3 40 Slow growth 0.4 10 ...
Q: The number of users of a certain website (in millions) from 2004 through 2011 follows. Year Period U...
A: Time Series is the collection of observations of various data items obtained through various measure...
Q: A reduction in the tax rate might lead to an increase in the growth rate of potential output if... O...
A: Generally a reduction in tax rate is considered the fiscal expansionary role of central government w...
Q: why is the supply chain and the macroeconpmic is important in the businesses in the healthcare
A: A supply chain refers to a network that links a company's suppliers to create and distribute a produ...
Q: One function of the Bank of Canada is... O a. Acting as the lender of last resort for the largest pr...
A: "Bank of Canada is Canada's central bank and a central bank provides financial and banking services ...
Q: A concrete pavement on a street would cost P 2M and would lasts for 5 years. Minor maintenance cost ...
A: The answer is given below
Q: Does Smith think these new low skill jobs created by the Industrial Revolution will be good for soci...
A: Smith believes that the Industrial Revolution's introduction of low-skilled occupations will benefit...
Q: Explain two strategies a firm in an oligopoly market pursue to increase customer loyalty.
A: Companies that collaborate or work together to reduce competition and control a separate market or s...
Q: Grinding mills A and B are being considered for a 12-year service in a chemical plant. The minimum a...
A: Given Initial cost of mill B: (P)= $14,400 Salvage value (F)=$2700 Annual operating cost =$1200 Annu...
Q: An increase in interest rate always lowers the net interest income (NII) of a bank. Is this statemen...
A: Net interest income (NII) refers to income earned by the banks that is determined by the difference ...
Q: How are the core and peripheral tiers changing?
A: As a consequence of their huge influence on global economic and social development, core-periphery i...
Q: What is an Option?
A: An Option is a kind of derivative whose value depends upon the underlying assets such as stocks, bo...
Q: 18. When OPEC raised the price of oil dramatically in the mid-1970s, experts said it was unlikely th...
A: OPEC which stands for Organization of the Petroleum Exporting Countries is a cluster of oil-producin...
Q: Derive and extensively discuss the equi-marginal principle. a. Two commodity case b. Three commodity...
A: Now suppose that there are two commodities that are x and y, the price of x is Px, and the price of ...
Q: he hysteresis hypothesis believes that... a. The path of an economy's real GDP can influence its lev...
A: In economics, there are various hypothesis used by economists to explain different economic situatio...
Q: An electric switch manufacturing company is trying to decide between three different assembly method...
A: The Annual Worth calculation method is usually used for comparing alternatives. This method is also ...
Q: What is your opinion of the idea that people have the potential to overcome difficult adversity?
A: People have the potential to overcome difficult adversity. By facing difficult adversity, the charac...
Q: Suppose that a large number of Canadian consultants decide to take employment in Europe due to bette...
A: Equilibrium is achieved at the output level where Ls equals Ld
Q: 2. Consider the money market model. Suppose that the current price is higher than the equilibrium pr...
A: In a market, the price level explains the market value of a specfiic good, services or any other ass...
Q: Categorize the terms based on whether they are used to calculate GDP based on the components of dema...
A: Demand-based GDP or Expenditure approach deals with money spent on goods and services within the geo...
Q: Costs and Profit Maximization: Work It Out 1 Suppose Margie decides to lease a photocopier and open...
A: As we know that fixed cast of the expenditure incurred on fixed factor which is not changeable as in...
Q: Who has developed the Revealed performance theory, how he /She explain it and what are the assumptio...
A:
Q: Here are a situation where the customer is important, in the "bargaining power with buyers". -They ...
A: The power of buyers to influence the prices of the products, quality of products and customer servic...
Q: If a tax is levied on the buyers of a product, the tax burden will fall entirely on the buyers. A.)...
A: Tax is revenue for the government.
Q: Assume that household 1 and household 2 has the following demands for education (a private good) (in...
A: Consumers' willingness to buy products and services at certain pricing is referred to as demand. Mar...
Q: Suppose that the market demand for a certain product is given by P = 670 – Q. where Qis total indust...
A: Introduction Here market demand has given. P = 670 - Q Here are three firms, so market demand can be...
Q: In the AD/AS model, the wage-adjustment process is asymmetrical because... O a. Employers delay wage...
A: Any adjustment that is being made by the employer on the pay of the employee is known as an adjustme...
Q: Which of the following statements are true? (i) The absolute value of the price elasticity of demand...
A: (i) The absolute value of the price elasticity of demand is greater when substitutes are available. ...
Q: Analyse and identify the most important macro- environmental forces ( political, economics, social, ...
A: A PEST study is performed to determine the external influences that affect an organization's Macro E...
Q: Draw a typical Investment curve into the diagram. Briefly explain how you came up with the curve and...
A: We now suppose that the population is not static. Rather, the population and labor force size rise a...
Q: The adjustment process for an economy experiencing an inflationary gap involves wages, unit costs an...
A: The inflationary gap is a type of GDP or output gap, it refers to the difference between actual GDP ...
Q: Which is NOT needed for the Fed to design and implement effective monetary policy to reduce the seve...
A: Since you have asked multiple question, we will solve the first question for you. If you want any sp...
Q: 5. The Federal Reserve's organization There are Federal Reserve regional banks. The Federal Reserve'...
A: "The Federal Reserve is the central banking system of U.S.".
Q: A firms production function is Q(L)=15L2-0.1L3, where output (Q) is a function of a single input lab...
A: For finding out the maximum value of any function, we need to derivative it and put it equal to zero...
Q: In a perfectly competitive market, the price of the good or service is determined by O the individua...
A: In a competitive equilibrium each buyer or seller have very less part of the entire market. So, they...
Q: Which shock can the Fed deal with most effectively? a shock to the LRAS curve a major oil shock a sh...
A:
Q: 1. You work for a beer company. Your boss wants to increase yearly sales by 5000 liters. To reach th...
A: 1) It is given that the price and the demographic composition of market is constant. Hence these two...
Q: are (3) defining differences between a Patent and a Provisional patent?
A: Provisional patent According to US patent law, a provisional application is a legal document filed w...
Q: erry spends $ 10 a month on pet dispensers and uperman action figures. His marginal- utility-to-pric...
A: Marginal Utility alludes to extra utility by virtue of the utilization of an extra unit of a product...
Step by step
Solved in 2 steps
- Exercise 6.8. Two companies with cost functions C1 (q1 )=5q1 and C2 (q2)= 0.5 q2 ² supply the to the same market. If the inverse market demand function is given by P = 100 - 0,5Q , where Q = q₁ + q₂ , find a) The production level of each firm, the price and the profits if the companies compete according to the Cournot model. (b) The level of production of each undertaking, the price and the profits if the undertakings agree to jointly maximise their profits. Show the results with the help of graphs.Consider two firms that produce the same product and sell it in a market with the following demand function: d(p) = max{0, 12 − p}, where p ≥ 0 is the unit price of the good. Suppose that, for technological reasons, firm 1 can produce either 4 units of output at the total cost of 10, or 6 units at the total cost of 15. Similarly, firm 2 can produce either 3 units of output at the total cost of 8, or 4 units at the total cost of 10. Assume that the firms make their production decisions simultaneously. Characterize the players’ strategy sets. Write down this game in the normal and extensive forms. Find all (if any) Nash equilibria of the game. Now assume that firm 1 makes its decision first. Firm 2 decides how much to produce after it observes firm 1’s output. Characterize the players’ strategy sets. Write down this game in the normal and extensive forms. Find all (if any) Nash equilibria of the game.Two firms compete in a homogeneous product market where the inverse demand function is P = 20 − 5Q (quantity is measured in millions). Firm 1 has been in business for one year, while firm 2 just recently entered the market. Each firm has a legal obligation to pay one year’s rent of $2 million regardless of its production decision. Firm 1’s marginal cost is $2 and firm 2’s marginal cost is $10. The current market price is $15 and was set optimally last year when firm 1 was the only firm in the market. At present, each firm has a 50 percent share of the market. a. Why do you think firm 1’s marginal cost is lower than firm 2’s marginal cost? b. Determine the current profits of the two firms. c. What would happen to each firm’s current profits if firm 1 reduced its price to $10 while firm 2 continued to charge $15? d. Suppose that, by cutting its price to $10, firm 1 is able to drive firm 2 completely out of the market. After firm 2 exits the market, does firm 1 have an incentive to raise…
- As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. There is a 60 percent chance of low demand and a 40 percent chance of high demand. The corresponding (inverse) demand functions for these two scenarios are P = 400,000 −400Q and P = 900,000 −250Q, respectively. Your cost function is C(Q) = 125,000 + 430,000Q. How many new homes should you build, and what profits can you expect? Number of homes you should build: homes Profits you can expect: $As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. There is a 80 percent chance of low demand and a 20 percent chance of high demand. The corresponding (inverse) demand functions for these two scenarios are P = 300,000 −300Q and P = 800,000 −200Q, respectively. Your cost function is C(Q) = 180,000 + 260,000Q. How many new homes should you build, and what profits can you expect? Give typing answer with explanation and conclusionAs the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. There is a 60 percent chance of low demand and a 40 percent chance of high demand. The corresponding (inverse) demand functions for these two scenarios are P = 300,000 – 400Q and P = 500,000 – 275Q, respectively. Your cost function is C(Q) = 140,000 + 240,000Q. How many new homes should you build, and what profits can you expect? Number of homes you should build: homes Profits you can expect: $
- As the manager of Smith Construction, you need to make a decision on the number of homes to build in a new residential area where you are the only builder. Unfortunately, you must build the homes before you learn how strong demand is for homes in this large neighborhood. There is a 40 percent chance of low demand and a 60 percent chance of high demand. The corresponding (inverse) demand functions for these two scenarios are P = 400,000 −450Q and P = 600,000 −250Q, respectively. Your cost function is C(Q) = 170,000 + 256,000Q. How many new homes should you build, and what profits can you expect? a. Number of homes you should build: _____ homes b. Profits you can expect: $Two firms compete in a homogeneous product market where the inverse demand function is P = 20 -5Q (quantity is measured in millions). Firm 1 has been in business for one year, while Firm 2 just recently entered the market. Each firm has a legal obligation to pay one year’s rent of $1.4 million regardless of its production decision. Firm 1’s marginal cost is $2, and Firm 2’s marginal cost is $10. The current market price is $15 and was set optimally last year when Firm 1 was the only firm in the market. At present, each firm has a 50 percent share of the market. b. Determine the current profits of the two firms. c. What would each firm’s current profits be if Firm 1 reduced its price to $10 while Firm 2 continued to charge $15?Consider two product designers compete where to place their product in the product space. Assume the product space is the interval from 0 to 1, including the end points. The prices of the product are fixed. Product designers place their product simultaneously in the product space. Consumer’s ideal product is spread out uniformly over the product space. Consumers like to choose their ideal product. If they cannot get their ideal product, they incur a disutility that depends linearly on the distance from their ideal product. (The disutility only depends linearly on the distance from their ideal product.) Each consumer has enough income to buy one product even if the distance from their own ideal product is 1. a. Where will the two products be placed in the Nash equilibrium if the locations of the product in the product space are chosen simultaneously? Explain. b. What are the socially optimal locations, i.e. the best locations from society’s point of view that minimise transportation…
- Suppose the market referred to in the previous problem is suddenly hit by a decrease in tastes and preferences. What will happen to Q in this market in the long run (relative to the initial equilibrium)? a) It will decrease b) It will not only decrease but fall to zero c)It will be unchanged d) It will increase e) It will be affected by what is known as the “Kazarosyan Effect”Exercise 4.6 An econometrician hired to analyse a local golf course has determined that there are two types of golfers, the regular and the occasional. The annual demand for games from regular players is given by QH = 24 – 0.3P, where P is the price of a round of golf. On the other hand, the annual demand for occasional items is given by QO = 10 – 0.1P. The marginal cost and the average total cost per item are equal to €20. a) If you could distinguish between regular and casual players, what price would be set for each type? How many games would each type of player play? How much profit could the golf course generate? Represent graphically. b) As an alternative to the discrimination of third degree prices, those in charge consider a double tranche rate according to which the members can play as many games as they wish at a price of € 20 per game. How much profit will the golf course generate if it charges all players the same annual fee for becoming a member of the club? What if you…You are the manager of a golf course. For simplicity assume that you only have two potential customers – a high demand customer whose inverse demand for golf services is given by P = 10 – 0.5Q and a low demand customer whose inverse demand for golf services is given by P = 8 – 0.5Q. Suppose the marginal cost to the golf course of each round of golf is zero.Suppose you have to charge both players the same two-part pricing strategy. Which of the following pricing strategies will yield the highest profit for you? A. Charge a fixed fee of €100 and a per unit fee of zero B. Charge a fixed fee of €64 and a per unit fee of zero C. Charge a fixed fee of €64 and a per unit fee of €4 D. Charge a fixed fee of €128 and a fixed fee of zero.