consider a market with inverse demand P(Q) = 10 − Q and two firms with cost curves C1(q1) = 2q1 and C2(q2) = 2q2 (that is, they have the same marginal costs and no fixed costs). They compete by choosing quantities. Suppose that Firm 1 chooses quantity first and is able to credibly commit to this choice. Then firm 2 choose its quantity after observing firm 1’s quantity. In the SPNE of this game, what is the price faced by consumers?- p = 3- p = 4- p = 5- p = 6- p = 7
Q: A good's demand is given by: P =775 - 2Q. At P = 127, the point price elasticity is: Enter as a…
A: The demand function is given as The price is 127. The formula for point price elasticity is
Q: 100 80 PRICE (Dollars per subscription) 8 8 8 8 8 70 10 0 02 4 6 10 12 14 16 QUANTITY (Thousands of…
A: Monopoly is a type of market structure that consists of only one single firm in the entire market or…
Q: For any level of output equal to QE, a buyer values a unit of goods in this market the unit will…
A: The externality, which is also known as a cost or benefit, has nothing to do with the third party.…
Q: Suppose the following information describes the economy: Consumption 8,000 Investment 1,000…
A: Given:Consumption (C): 8,000Investment (I): 1,000Government purchases (G): 1,000Net exports…
Q: rom California to New York, legislative bodies across the United States are considering eliminating…
A: Nonpecuniary cost: Nonpecuniary cost refers to the cost of something that cannot be measured in…
Q: whatwould the new tax rate have to change to in order to offset the drop in Y?
A: Autonomous spending: The expenditures, often taken up by the government, necessary to run a…
Q: Note: don't use chat gpt.
A: The objective of the question is to determine Sean's threat value in the context of a potential sale…
Q: suppose a pharmaceutical company considers increasing the price of insulin tm $125 per vial to $300…
A: Price elasticity of demand measures how sensitive an item's demand is to variations in its price. It…
Q: Suppose that the US firm Halliburton buys construction equipment from the Japanese fim Komatsu at a…
A: The exchange rate affects the inflation rate of an economy. A higher exchange rate defines the…
Q: For each of the following scenarios, use the graphical depiction of the Malthusian model to…
A: According to this concept, population growth is exponential but resource or food supply increase is…
Q: Consider the weekly market for gyros in a pepular neighborhood close to campus. Suppose this market…
A: The competitive market experiences a number of buyers and sellers. None of these buyers or sellers…
Q: Macmillan Learning Consider the given simple economy. Sheepnip Co. makes sheep feed. Better-bald…
A: The term GDP in economics can be defined as the monetary value of all the final goods and services…
Q: Use the following diagram: PRICE Supply Demand QUANTITY The diagram above shows the demand and…
A: Market equilibrium basically refers to a scenario at which the demand of the goods or services is…
Q: The nearby graph shows Claudia's budget constraint for purchases of shoes and purses. Claudia's…
A: A budget line shows the various combinations of two commodities that a consumer can buy using his…
Q: Suppose that land is specific to corn, capital is specific to automobiles, labor is mobile between…
A: For Automobiles:Sales revenue is 400.The labor payment is 100.The payment to capital is 300. For…
Q: Ultimatum Game
A: The Ultimatum Game is a classic experimental economics game that explores decision-making and…
Q: You invest $5,000 per year at 8% nominal interest compounded quarterly. What is the future value…
A: Compound Interest is the interest calculated on the initial principal and also on the accumulated…
Q: Consumers want more avocados, prices of avocados will: O increase, signaling producers to grow more.…
A: The issue here is basically understanding the way the expansion in customer interest for avocados…
Q: You own a farm, you hire labor and capital to produce apples. The marginal product of the last unit…
A: Capital here means financial capital or the available assets that an individual or business uses to…
Q: Ebba Kantzen says the following: "I am currently producing 10,000 pizzas per month at a total cost…
A: Cost can be defined as a concept that shows the amount of expenditure and any other sacrifice such…
Q: Bernardo Beefmaster has 50 cull cows that average 1100 lbs and he purchased them for $60/cwt. He fed…
A: The breakeven value refers back to the point at which TC equals TR. At this factor, there may be no…
Q: Suppose the economy is initially in long-run equilibrium. Then suppose there is a sudden rise in the…
A: Aggregate demand:Aggregate Demand is when the total number of consumers have the desire to buy…
Q: 8. Begin from the baseline preferences and endowments. A. Assume Yuri is wealthier than Xavier; he…
A: Interest rates are expressed as a percentage and can be either simple or compound. Simple interest…
Q: Explain and illustrate each of the following statements using supply-and demand diagrams. Show the…
A: The objective of the question is to understand the impact of various factors on the supply and…
Q: 5. Interest, inflation, and purchasing power Suppose Damaris is a sports fan and buys only football…
A: The nominal interest rate refers to the interest rates without taking the prevalent inflation rate…
Q: Supply -Induced Demand The chart below depicts an individual's utilization of her regular…
A: Minimum Benefit (MB) : The minimum benefit represents the lowest level of value or service that a…
Q: 46.20- price 0 0 a b C g die h Supply 2021 Supply 2022 Demand 2021 = Demand 2022 quantity
A: Markets help determine how resources such as labor(L), capital(K), and land are allocated in an…
Q: Apply CAGE (Only Administrative and Economics). What are the country conditions that made Brazil a…
A: The core problem is figuring out the helpful variables in Brazil for Monsanto's innovation…
Q: Real Output Demanded (Billions of dollars) 20 PRICE LEVEL (Billions of dollars) 100 80 8 60 9 20 On…
A: The aggregate demand refers to the total demand for all the finished goods and services produced in…
Q: Your company will generate $63,000 in annual revenue each year for the next seven years from a new…
A: The company is expected to generate $63000 in annual revenue each year, The time span is 7 years.…
Q: consider a market with inverse demand P(Q) = 10 − Q and two firms with cost curves C1(q1) = 2q1 and…
A: The correct answer is (a) Neither firm enters the market.Explanation:Firm 1 decides whether to join…
Q: During an economic downturn, a nation's central bank decides to implement quantitative easing by…
A: The issue here basically involves understanding the impact of quantitative easing (QE) on the…
Q: Assume the US has constant velocity, constant annual money growth equal to 5% and constant growth in…
A: The issue includes understanding how the worth of the dollar changes compared with the Mexican peso…
Q: Suppose the own price elasticity of market demand for retail gasoline is -0.9, the Rothschild…
A: The Rothschild Index(R) assesses how sensitive an industry's demand(DD) for a product is in…
Q: Managerial economics is largely independent of the internationalization of economic activity.…
A: Managerial economics, also known as business economics, is a subfield of economics wherein economic…
Q: Sean owns a condo that he values at $500, 000. Sean hosts a dinner party, and invites Mo, a friend…
A: The objective of the question is to determine Sean's threat value in the context of selling his…
Q: Just to make sure you've gotten enough practice using the different formulas in this chapter, let's…
A: The concept of total cost refers to the sum of all costs incurred by a firm in producing a certain…
Q: What is the deadweight loss associated with monopoly? A. The loss in consumer surplus due to high…
A: Deadweight loss in economics refers to a loss of financial efficiency that can happen when the…
Q: Consider a simple economy that produces two goods: coffees and enamel pins. The following table…
A: Gross domestic product measures the market value of final goods and services produced by a nation…
Q: This was wrong ighh
A: The equal monthly payment is the fixed amount paid by the borrower to the lender to repay the…
Q: The shift from D to D1 in the graph below represents a(n): Price per Can 60 O Demand Glut Copyright:…
A: The demand curve is a graphical representation of the relationship between the price of a good or…
Q: Wanda Littlemore’s utility function is U(x, y) = x + 46y - 2y^2. Her income is $135. If the price of…
A: The utility function is given as The income level is $135.The price of x is $1The price of y is $18.…
Q: 13. In the market for oil in the long run, demand and supply are. a. inelastic, so a shift in supply…
A: Elasticity: It measures how responsive consumers and producers are to changes in price.Inelastic:…
Q: Assume the time from acceptance to maturity on a $2,200,000 banker's acceptance is 90 days. Further…
A: A discipline of economics called "international economics" studies the economic exchanges and…
Q: Question 3.(LO3 Apply) Simon Ltd is run by Simon Leather who makes leather belts for designers.…
A: Cost can be defined as a concept that suggests the amount of expenditure and any other sacrifice…
Q: a. Compute the price elasticity between points C and D and points H and I. Point C to D Point H to…
A: The elasticity of demand:Elasticity is defined as the responsiveness to change in one variable. When…
Q: Suppose there are only two fishermen, Maria and Ruby, who fish along a certain coast. They would…
A: The marginal cost of building each lighthouse is $100.The demand curve for Margia is The demand…
Q: Show full solutions of the following Identify and interpret the opportunity costs values for Nation…
A: Opportunity cost refers to the potential benefit that an individual, investor, or business gives up…
Q: Policy Decisions In 2022, 670,000 electric vehicles (EVS) were sold in the United States.…
A: Elasticity of demand measures the responsiveness of the quantity demanded of a good or service to a…
Q: What is Businesses Assisted Economic Development for a doctor's office?
A: The objective of the question is to understand the concept of Business Assisted Economic Development…
consider a market with inverse demand P(Q) = 10 − Q and two firms with cost
Suppose that Firm 1 chooses quantity first and is able to credibly commit to this choice. Then firm 2 choose its quantity after observing firm 1’s quantity. In the SPNE of this game, what is the
- p = 3
- p = 4
- p = 5
- p = 6
- p = 7
Trending now
This is a popular solution!
Step by step
Solved in 1 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.Suppose that two identical firms produce widgets and that they are the only firms in the market. The average and marginal cost is €60 for each firm. Price is determined by the following demand curve: P = 300 – Q where Q = Q1 + Q2. Suppose firm 1 is the leader and firm 2 is the follower. The output produced by each firm in a Stackelberg equilibrium is A. Firm 1 will produce 60 and Firm 2 will produce 120 B. Firm 1 will produce 80 and Firm 2 will produce 40 C. Firm 1 will produce 120 and Firm 2 will produce 40 D. Firm 1 will produce 120 and Firm 2 will produce 60Two firms, Firm 1 and Firm 2, compete by simultaneously choosing prices. Both firms sell an identical product for which each of 100 consumers has a maximum willingness to pay of $40. Each consumer will buy at most 1 unit, and will buy it from whichever firm charges the lowest price. If both firms set the same price, they share the market equally. Costs are given by C; (qi) = 16q¡ . Because of government regulation, firms can only choose prices which are integer numbers, and they cannot price above $40. Could you help me with these questions? a) If Firm 1 chooses Pi price? = 32, Firm 2's best response is to set what b) If Firm 2 chooses the price determined in the previous question, Firm 1's best response is to choose what price? c) If Firm 1 chooses p₁ = 9, Firm 2's best response is a range of prices. What is the lowest price in this range?
- Two firms, Firm 1 and Firm 2, compete by simultaneously choosing prices. Both firms sell an identical product for which each of 100 consumers has a maximum willingness to pay of $40. Each consumer will buy at most 1 unit, and will buy it from whichever firm charges the lowest price. If both firms set the same price, they share the market equally. Costs are given by c; (q) = 16q;. Because of government regulation, firms can only choose prices which are integer numbers, and they cannot price above $40. Answer the following: a) If Firm 1 chooses pi = 32, Firm 2's best response is to set what price? b) If Firm 2 chooses the price determined in the previous question, Firm 1's best response is to choose what price? c) If Firm 1 chooses pi = 9, Firm 2's best response is a range of prices. What is the lowest price in this range? d) Now suppose both firms are capacity-constrained: Firm 1 can produce at most 42 units, and Firm 2 can produce at most 44 units. If firms set different prices,…Assume the inverse demand function in a market is given by P ( Q ) = 500 − Q where Q is the total industry output, that is the sum of the output of all firms in the market. There are two firms (indexed by i = 1,2) who both have a cost of producing the good given by c ( q i ) = 10 ∗ q i The two firms are competing in the Cournot manner, that is they choose their quantities simultaneously in order to maximize profits. What is the best response of firm 1 if firm 2 chooses an output level of 200? (input a whole number:) The best response function of firm 1 with respect to firm 2's quantity choice takes the form: q 1 ( q 2 ) = w ∗ ( x − y ∗ q 2 − z ) where (w,x,y,z) are parameters of the problem. Solve for this best response function and provide the product (w*x*y*z) in the next blank: What is the Nash Equilibrium quantity produced by firm 1? (round to the nearest whole number)Two firms compete in selling homogeneous goods. They choose their output levels q1 and q2 simultaneously and face demand curve P=80-6Q, where Q=q1+q2. The total cost function of firm 1 is C1=8q1 and the total cost function of firm 2 is C2=32q2+2/3. a) Find and draw the reaction curves of the two firms. b) Compute equilibrium quantities, price and profits. Suppose now that firm 2, thanks to a technological innovation, becomes more efficient. The new total cost function of firm 2 is C2= 8q2 c) Compute the new equilibrium quantities, price and profits.
- . The market for widgets consists of two firms that produce identical products. Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms. Firm 2 is known to have a cost advantage over firm 1. A recent study found that the (inverse) market demand curve faced by the two firms is P = 280 – 2(Q1 + Q2), and costs are C1(Q1) = 3Q1 and C2(Q2) = 2Q2. a. Determine the marginal revenue for each firm. b. Determine the reaction function for each firm.Consider a market for crude oil production. There are two firms in the market. The marginal cost of firm 1 is 20, while that of firm 2 is 20. The marginal cost is assumed to be constant. The inverse demand for crude oil is P(Q)=200-Q, where Q is the total production in the market. These two firms are engaging in Cournot competition. Find the production quantity of firm 1 in Nash equilibrium. If necessary, round off two decimal places and answer up to one decimal place.Consider the following market demand function: Q= 20-2P, where P is the market price. Suppose there are two firms- A,B in the market and they have the same cost function: the per unit cost of producing output is 4. The firms compete by choosing quantities. Find the reaction functions for both the firms if they are maximizing profits. What is the profit maximizing output for each firm and corresponding market price? If there was only one firm in the market how would your answer change?
- Consider two firms competing to sell a homogeneous product by setting price. The inverse demand curve is given by P = 40 − Q . Firm 1 has MC1(Q1) = 4 and firm 2 has MC2(Q2) = 4.5. Based on this information, we can conclude that the market price will be a. $4.25 and each firm will produce 18 units. b.$4 and each firm will produce 18 units. c. $4 and firm 1 will produce 36 units and firm 2 will produce 0 units. d. $4.50 and firm 1 will produce 36 units and firm 2 will produce 0 units.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…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.