Considering that two competing companies sell a similar product in a market governed by the Cournot model in which the demand function is given by p = R$8,000 - 0.7 (q1+q2) and the cost of the product defined as R$1,700.00. The values resulting from this scenario are:
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Considering that two competing companies sell a similar product in a market governed by the Cournot model in which the demand function is given by p = R$8,000 - 0.7 (q1+q2) and the cost of the product defined as R$1,700.00. The values resulting from this scenario are:
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- For the infinitely repeated game based on the stage game as shown, consider a symmetric strategy profile in which a player initially chooses x and continues to choose x as long as no player has ever chosen y; if y is ever chosen, then a player chooses z thereafter. Derive a condition on the discount factor for this strategy profile to be a SPNE.Considering the actors (i.e., two shipping lines and the port authorities) and the predetermined cost functions described below (i.e., transportation costs and port fees), and determine the equilibrium outcome (price, quantity, and profit) of the game. Let qi for i = 1 and 2 denote the number of containers transported by shipping line i. Assume a standard inverse demand function for a container of the form P = 20 000 − (q1 + q2) , and a total transportation cost function, excluding fixed costs, of the form TC = 200qi + (dt/2)*qi2 for i = 1,2, and t=low, high, representing low and high diseconomies of scale, i.e. dlow < dhigh. When both shipping lines choose the port of Gothenburg, which is characterized by low diseconomies of scale, each vessel incurs a lump sum of €1200 in port fees. In the case when both vessels choose the port of Helsingborg, which is characterized by high diseconomies of scale, each vessel incurs €1000 in port fees. Lastly, when the shipping lines choose…Three firms with identical marginal cost of 30 compete in a market with inverse demand of P = 50 - 8Q. If the firms behave as the Cournot model suggests, what is the pass through rate for a change in marginal cost?
- LalaFast 21 is a major carrier based in the Philippines and has made a strategy of cutting fares drastically on certain routes with large effects on traffic in those markets. For example, on the Baguio-Cubao route the entry of LalaFast into the market caused average fares to fall by 48 per cent and increased market revenue from P21,327,008 to P47,064,782 annually. On the Tuguegarao-Caloocan route, however, the average fare cut in the market when LalaFaST entered was 70 per cent and market revenue fell from an annual P66,201,553 to P33,101,514.Questions1. Calculate the PEDs for the Baguio-Cubao route and Tuguegarao-Caloocan route.2. Explain why the above market elasticities might not apply specifically to Lalafast 21.3. If LalaFast 21 does experience a highly elastic demand on the Baguio-Cubao route, what is the profit implication of this?4. Explain why the fare reduction on the Tuguegarao-Caloocan route a profitable strategy for LalaFast may still be.The following are the demand and supply functions for three competing mobile phone models ofdifferent manufacturers. ??? = ?? − ???? + ??? + ?????? = ???? − ????? = ?? + ??? − ??? + ?????? = ??? − ????? = ?? + ??? + ??? − ?????? = ??? − ??Using Gaussian Elimination Method determine whether there are prices which would bring thesupply and demand levels into equilibrium for each of the three mobile phone models. If so, what are the equilibrium demand and supply quantities?You may get the three equations of market equilibrium condition by equating ???with ??? , ??? ???? ??? and ??????? ???.Forey, Inc., competes against many other firms in a highly competitive industry. Over the last decade, several firms have entered this industry and, as a consequence, Forey is earning a reLurn on investment that roughly equals the interest rate. Furthermore, the four-firm concentration ratio and the Herfindahl-Hirschman index are both quite small, but the Rothschild index is significantly greater than zero. Based on this information, which market structure best characterizes the industry in which Forey competes? Explain.
- Given that If Alfonso's marginal cost is $6, their best-response function is, Pa=(Pb+30)/2 and If Bernice’s marginal cost is $12, their best-response function is, Pb=(Pa+36)/2, Find the equilibrium prices for the case in which Alfonso's marginal cost is $6 and Bernice's marginal cost is $12.Two firms compete in prices in a market for a homogeneous product. In this market there are N > 0 consumers; each buys one unit if the price of the product does not exceed $10, and nothing otherwise. Consumers buy from the firm selling at a lower price. In case both firms charge the same price, assume that N/2 consumers buy from each firm. Assume zero production cost for both firms. Suppose that the firms set prices simultaneously in a game that is repeated infinitely. Let denote the time- discount parameter. Propose trigger price strategies for both firms yielding the collusive prices of ($10, $10) each period. Calculate the minimal value of that would enforce the trigger price strategies you proposed.The Able Manufacturing Company and Better Bettors, Inc. are rival firms in the production of a calculator used by horse racing fans for handicapping (determining betting strategies). Each firm has a fixed cost of $100 and a MC = $10 in producing calculators. The demand for the industry’s product is: Q = 900 – 5P, where P is the market price and Q = Q1 + Q2. If each firm must choose how many calculators to produce and sell without knowing of its rival’s production decision, what will be the Cournot equilibrium price and quantities produced? Calculate the profit for each firm.
- Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −2.5. The marginal cost of producing the product is constant at $225, while average total cost at current production levels is $300.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist. $ b. you compete against one other firm in a Cournot oligopoly. $ c. you compete against 19 other firms in a Cournot oligopoly. $ Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Price comparison services on the Internet (as well as “shopbots”) are a popular way for retailers to advertise their products and a convenient way for consumers to simultaneously obtain price quotes from several firms selling an identical product. Suppose that you are the manager of Digital Camera, Inc., a firm that specializes in selling digital cameras to consumers that advertises with an Internet price comparison service. In the market for one particular high-end camera, you have only one rival firm—The Camera Shop—with which you’ve competed for the last four years by setting prices day after day. Being savvy entrepreneurs, the ease of using the Internet to monitor rival firms’ prices has enabled you and your rival to charge extremely high prices for this particular camera. In a recent newspaper article, you read that The Camera Shop has exhausted its venture capital and that no new investors are willing to sink money into the company. As a result, The Camera Shop will discontinue…Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −3. The marginal cost of producing the product is constant at $100, while average total cost at current production levels is $175.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist. b. you compete against one other firm in a Cournot oligopoly. c. you compete against 19 other firms in a Cournot oligopoly.