Homework 3A.Dominant firm model questionsAssume a market of a crude oil market. The world demand and the supply equations for OPEC and shale oilproducers are as shown below:Qworid,D = 150 – 3P,MCOPEC = 5+ 0.4Qs.OPECMCSHALE = 35 + 2Qs,SHALE1. Find the critical price and critical quantity2. Find the market price3. Find the market quantity supplied by OPEC and market quantity supplied by Shale4. Find the profit of OPEC and profit of Shale oil producers

World Demand :Q = 150 - 3P Inverse demand : P = 50 - Q/3 MC of OPEC countries : 5 + 0.4Q MC for…

Homework 3 A. Dominant firm model questions Assume a market of a crude oil market. The world demand and the supply equations for OPEC and shale oil producers are as shown below: Qworla.o- 150 - 3P, MCopac = 5+ 0.4Qs0PeC MCMALE - 35 + 20,snALe 1. Find the critical price and critical quantity 2. Find the market price 3. Find the market quantity supplied by OPEC and market quantity supplied by Shale 4. Find the profit of OPEC and profit of Shale oil producers

Homework 3 A. Dominant firm model questions Assume a market of a crude oil market. The world demand and the supply equations for OPEC and shale oil producers are as shown below: Qworla.o- 150 - 3P, MCopac = 5+ 0.4Qs0PeC MCMALE - 35 + 20,snALe 1. Find the critical price and critical quantity 2. Find the market price 3. Find the market quantity supplied by OPEC and market quantity supplied by Shale 4. Find the profit of OPEC and profit of Shale oil producers

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter24: Price-searcher Markets With High Entry Barriers

Section: Chapter Questions

Problem 9CQ

See similar textbooks

Similar questions

Firms J and K produce compact-disc players and compete againstone another. Each firm can develop either an economy player (E)or a deluxe player (D). According to the best available marketresearch, the firms’ resulting profits are given by the accompanyingpayoff table.a. The firms make their decision independently, and each is seeking itsown maximum profit. Is it possible to make a confident predictionconcerning their actions and the outcome? Explain.Firm KE DE 30, 55 50, 60 Firm JD 40, 75 25, 50b. Suppose that firm J has a lead in development and so can move first.What action should J take, and what will be K’s response?c. What will be the outcome if firm K can move first?
COURSE: MICROECONOMICS - Stackelberg ModelIn a given market good there are only 2 firms that satisfy the demand, and their respective total cost functions are: CTi = 400 and the demand that is estimated is P = 120 - 2QIf the exception variable of both firms is the quantity they will produce, such that the decisions to produce are made sequentially firm number 1 will be the leader who decides the quantity to produce and firm number 2 (follower) decides based on the production of firm number 1, we ask:(a) quantity produced by each firm and its equilibrium price in the market.(b) Profit of each company at equilibrium and (c) Graph your results
Consider a coastal economy served by two (2) fishing firms. There is only one type of fish that is harvested. All firms send their boats out at the same time and they compete on quantity. Demand given by P = 200 – Q and each firm has a constant marginal cost of $20. There are no fixed costs. a. Using the appropriate model, what will be an individual firm’s quantities and profits? b. Suppose that Firm 1 adopts a new production technology that reduces his marginal cost of production from $20 to $10. Firm 2 does not adopt the technology and continues to have a marginal cost of $20. What will be the new quantity and profit outcomes? How has the technology affected the relative position of Firm 1 and Firm 2 in the market?
COURSE: MICROECONOMICS - Bertrand's ModelAssume that a market is supplied by 2 companies, whose total costs are: CTi = 100Respective demand of each is: q1 = 120 - 2p1 + p2 and q2 = 120 - 2p2 + p1It is requested to:(a) calculate the firms' profit and reaction function.(b) plot the market equilibrium price and reaction function(d) calculate equilibrium quantity produced by each firm(e) determine profits that both firms will have at equilibrium.
COURSE: MICROECONOMICS - Cournot Model:In the market for a given good there are only 2 firms satisfying the demand, and their respective total cost functions respond to the form: CTi = 10Qi + 5 and the demand is estimated to be: P = 31 - QIf the decision variable for both firms is that the quantity they will produce and realize will be decided simultaneously it is asked to:(a) calculate the profit and reaction function of each firmb) graph market equilibriumc) calculate the profits that both companies will obtain in equilibrium
usiness EconomicsQ&A LibraryTwo firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in the industry that manufacture this product. Their marginal cost (MC) is equal to their average cost (AC) and it is constant at MC = AC = X, for both firms. Market demand is given as Q = Y – 2P (where P = price and Q = quantity). Select any value for X between [21 – 69] and any value for Y between [501 – 999]. Using this information, calculate the Industry Price, Industry Output, Industry Profit, Consumer Surplus and Deadweight Loss under each of the following models: (a) Cournot Model Two firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in…
Adani Shantigram is a picturesque township on Ahmedabad-Gandhinagarhighway. The statement ‘The Good quality life’ shows the commitment ofthe developer towards ensuring that the residents enjoy all the amenitiesand services in the township at least cost and inconvenience. In order toensure competitive outcome, ATRICO (Adani Real Estate Arm) hasensured that for all the important services, many service providers arepresent, so that none of them can charge a high monopoly price from theresidents. Therefore, there are 4 milk parlours, 4 laundromats, 4photocopiers, 4 beauty saloons and 4 grocers in the township. Thisnumber ‘4’ has been decided in a high level meeting, where this wasdiscussed that having less than 4 will result in duopoly/tight oligopoly,and having more than 4 will require more space and therefore notpreferred.Last month, the ladies in ‘Water Lily’ complained that the prices chargedby beauty saloons in the township are very high. In order to address thecomplaints, details…
Economics Bidding for Bookstore Licenses. Paige initially has the only license to operate a bookstore in Bookville. She charges a price of $13 per book, has an average cost of $3 per book, and sells 1,501 books per year. When Paige's license expires, the city decides to auction two bookstore licenses to the highest bidders. Suppose the relevant variables (price, average cost, and output per firm) take on only integer valueslong dash—no fraction or decimals. a. Suppose Paige is optimistic and imagines the best possible outcome with a two-firm market. What is the maximum amount she is willing to pay for one of the two licenses? $ nothing (Hint: How will the relevant variables change? What is the smallest possible change in their values?) b. Suppose Paige is pessimistic and imagines the worst possible outcome with a two-firm market. What is the maximum amount she is willing to pay for one of the two licenses? $ nothing (Enter your response as an integer.)
In Brazil, coffee beans are cultivated by a very large number of small farms that all produce beansof similar quality and taste at similar costs. Land is still plentiful, and the equipment required isaffordable enough to allow new farming businesses to start up under current market conditions.However, better production techniques, especially alternatives to polluting fertilisers anddeforestation, are needed in this industry. Using the theory and models of industry structure, examinethis industry. Should government be worried about any aspect of how an industry with this marketstructure will perform?
There are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?
Below we the market demand for a good, and the total cost of producing various levels of quantities by the industry. This problem is a theoretical example of Cournot Competition, where firms choose quantities to produce, and end up selling at whatever price the market is willing to pay for the total industry output. For simplification purposes, firms have no fixed costs, and a constant MC and ATC.a. Complete the table. Quantity Price TR MR TC MC ATC Profit 0 $14 — 0 — — 10 $11 10 20 $8 20 30 $5 30 40 $2 40
Provide examples of commodities listed in the Philippines that might be described by the following models: A. Cournot, B. Stackelberg, and justify your answers and show graph