Consider an industry that consists of 3 tirms facing a demand curve P = 80 - Q. All three firms have constant marginal costs and zero fixed costs. The marginal cost for firms 1 and 2 is $10, while the marginal cost for firm 3 is $20. Find the Cournot equilibrium quantities assuming that firms 2 and 3 merge. b. Calculate the equilibrium market quantity and price. Calculate the equilibrium profit for each firm,

Consider an industry that consists of 3 tirms facing a demand curve P = 80 - Q. All three firms have constant marginal costs and zero fixed costs. The marginal cost for firms 1 and 2 is $10, while the marginal cost for firm 3 is $20. Find the Cournot equilibrium quantities assuming that firms 2 and 3 merge. b. Calculate the equilibrium market quantity and price. Calculate the equilibrium profit for each firm,

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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Please no written by hand solution Considerthe following problem. There are five firms producing a homogenous good and competing in quantities simultaneously. The demand function for this good is given by D(p) = 100−p, where p denotes price. The marginal cost is the same for all firms and equals 40 Answer the following questions. (a) Compute the equilibrium quantities and profits of each firm. (b) Now suppose that two of these firms (say firms 1 and 2) want to merge. (The remaining firms stay unchanged.) Merging, however, is costly. To merge, each merging firm has to pay a fixed cost F. Determine the highest fixed cost F that the two firms would be willing to pay in order to proceed with the merger.
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A) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 90 – 3Q. The marginal cost for each firm is €18. Calculate the level of output that each firm would produce at the Cournot equilibrium. B) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 60 – Q. The marginal cost for each firm is €36. What price should Firm 1 charge at the Cournot equilibrium? C) Consider the production function Q = 10KL. Will the MRTS for this production function remain constant along the Q = 200 isoquant? Explain briefly.
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