am. 124. Cournot Duopoly with differentiated products Suppose the firms in a duopolyproduce differentiated products (products that are similar but have attributes thatdistinguish them from other products in the market.) The inverse demand for Firm 1is p₁ =52 91 -0.5q2. The inverse demand for Firm 2 is p2 = 4092-0.5q1. Eachfirm has a marginal cost of MC = 1. Solve for Cournot-Nash equilibrium quantities.

Step 1: Understand the Cournot ModelThe Cournot model assumes firms simultaneously choose quantities…

Answered: Cournot Duopoly with differentiated…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter14: Monopolistic Competition And Product Differentiation

Section: Chapter Questions

Problem 16P

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A common characteristic of oligopolies is a. interdependence in pricing decisions. b. independent pricing decisions. c. low industry concentration. d. few or no plant-level economies of scale.
Answer the given question with a proper explanation and step-by-step solution. The inverse market demand in a homogeneous-product Cournot duopoly is P = 200 – 2(Q1 + Q2) and costs are C1(Q1) = 26Q1 and C2(Q2) = 32Q2. Firm 1: Q1 = ? - Q2Firm 2: Q2 = ? - Q1 b. Calculate each firm’s equilibrium output.Firm 1:Firm 2: c. Calculate the equilibrium market price.$ d. Calculate the profit each firm earns in equilibrium.Firm 1: $Firm 2: $
Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly a. Industry A has a four-firm concentration ratio of 0.005 percent and a HerfindahlHirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34. b. Industry B has a four-firm concentration ratio of 0.0001 percent and HerfindahlHirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023 c. Industry C has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0. d. Industry D has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76.
Based on the information given, indicate whether the following industry is best characterized by the model of perfect competition, monopoly, monopolistic competition, or oligopoly.a. Industry A has a four-firm concentration ratio of 0.005 percent and a HerfindahlHirschman index of 75. A representative firm has a Lerner index of 0.45 and a Rothschild index of 0.34.b. Industry B has a four-firm concentration ratio of 0.0001 percent and HerfindahlHirschman index of 55. A representative firm has a Lerner index of 0.0034 and Rothschild index of 0.00023.c. Industry C has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 10,000. A representative firm has a Lerner index of 0.4 and Rothschild index of 1.0.d. Industry D has a four-firm concentration ratio of 100 percent and HerfindahlHirschman index of 5,573. A representative firm has a Lerner index equal to 0.43 and Rothschild index of 0.76
The market demand in a homogeneous-product Cournot duopoly is P = 100 - 2Q, where Q = Q1 + Q2 (Firm 1 and Firm 2), and the costs functions for each firms are: TC1 = 12Q1 and TC2 = 20Q2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 F1 cheats w/ QDC, F2 colludes F1 cheats w/ QBRF, F2 2 colludes
Consider a Stackelberg duopoly with the following inverse demand function: P = 100-2Q₁-2Q₂. The firms' marginal costs are identical and are given by MCi = 2. Based on this information, the Stackelberg leader's marginal revenue function is Multiple Choice a)MR(Q ₂) =100-2Q₂ + c1/2. b) MR(Q ₂)= 100-Q₂+ c2/2. c)MR(Q₁) = 50-2 Q₁ + c2/2. d)MR(Q₁) = 50-2Q₂ + c 1/2.
The market demand in a homogeneous-product Cournot duopoly is P = 113 - 2.2Q, where Q = Q1 + Q2 (Firm 1 and Firm 2), and the costs functions for each firm are: TC1 = 25 + 16.3Q1 and TC2 = 29 + 27.7Q2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 F1 cheats w/ QDC, F2 colludes F1 cheats w/ QBRF, F2 2 colludes
The market demand in a homogeneous-product Cournot duopoly is P = 100 - 2Q, where Q = Q1 + Q2 (Firm 1 and Firm 2), and the costs functions for each firms are: TC1 = 12Q1 and TC2 = 20Q2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 F1 colludes, F2 cheats w/ QDC F1 colludes, F2 cheats w/ QBRF
The market demand in a homogeneous-product Cournot duopoly is P = 113 - 2.2Q, where Q = Q1 + Q2 (Firm 1 and Firm 2), and the costs functions for each firm are: TC1 = 25 + 16.3Q1 and TC2 = 29 + 27.7Q2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 Duopoly competition Collusion
The market demand in a homogeneous-product Cournot duopoly is P = 100 - 2Q, where Q=Q1+Q2 (Firm 1 and Firm 2), and the costs functions for each firms are: TC1 = 12Q1 and TC2 = 20Q2. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round if values are used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 Duopoly competition Collusion
Perfect Picture Cameras: Perfect Picture Cameras is a national camera company. It competes with 2-3 national camera companies. In order to gain an upper hand in the market, Perfect Picture Cameras has differentiated its camera by including an automatic focus and flash. Perfect Picture Cameras has the ability to raise its prices because of its unique features. However, it sometimes worries about the decisions and strategies of the other competitors. Choose one type of market structure: Perfect competition oligopoly monopolistic competition monopoly Type of Market Structure: Reason:
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?

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