If a single firm with constant marginal cost of $8 monopolizes a market with demand Q=100-2P , how large is the dead weight loss from the monopoly?
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- Consider a duopoly with a leader (called L) and a follower (called F). The market demand is given as: P=500-0.25Q, where Q=QL+QF The total cost function for the leader is given as: TCL=0.03QL The total cost function for the follower is given as: TCF=0.1QF All variables are per day, per plant. What is the profit-maximizing quantity for the leader (per day, per plant)? (Note: Round your answer to two decimal pointsIn a market with demand Q = 2,310 − p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q) = 3/2 Q^2 (with MC(Q) = 3Q, that is) Calculate the market price under each of the 6 scenarios below, (a) A, B, C collude as though they are all plants of the same single multi-plant monopoly. (b) A, B, C act as price taking perfectly competitive firms. (c) B and C act as two plants of a single multi-plant monopoly called “B+C”, which competes in quantities (Cournot competition) against A. (d) (WARNING: non-integer answer) As in (iii) above, but Firm A acts first and chooses its quantity as a leader and B+C follows (Stackelberg competition) (e) B and C jointly form the fringe supply and A is the dominant firm as in the dominant firm model. (f) A, B, C compete in quantities with each other (Cournot-Nash equilibrium). (HINT: Best Response equations should be symmetrical; hence there is a symmetric solution with qA = qB = qC as the Cournot-Nash equilibrium)Consider a duopoly in which the marginal cost of every firm is $2. The market demand is: Q = 14 - P, where Q = q1 + q2, and P denotes the price per unit. Calculate the total output, price and production quotas (assuming each firm has 50% of the market) if the firms maximize the joint profits. Total output Q = Price P = $ Production quotas q1 = , q2 =
- Suppose duopolists face the demand curve P (q) = 4-q firm one has costs c(q1)=2q1 and firm two has costs c(q2)=2q2 What is the optimal quantity if firm one moves first in a Stackelberg competition?Two farmers produce milk for local town with local milk demand given by Q=100-1/3P (P denotes price measured in Rands, Q denotes the quantity measured in litres). Both farmers have the same cost function given by TC=150+2q (where q denotes output) (a) Does joining a cartel offer any benefits to both farmers? Justify your answerThe market for dark chocolate us characterized by Cournot duopolists - Honeydukes and Wonka industries. The market demand for dark chocolate is: P = 8 - 0.005Qd where P is the price per bar in dollars and Qd is dark chocolate's daily quantity demanded in bars (use qh to represent the quantity of dark chocolate sold by Honeydukes and qw to represent the quantity of dark chocolate sold by Wonka Industries). Honeydukes has a constant marginal cost of $2.50 per bar, while Wonka Industries has a constant marginal cost of $3.00 per bar. The firms move simultaneously in choosing their profit-maximizing quantity of output. a. Given the firms move simultaneously, what is the equation for Honeydukes' reaction function with qh expressed as a function of qw? b. Given the firms move simultaneously, what is the equation for Wonka's reaction function with qw expressed as a function of qh? c. What quantity of dark chocolate will each firm produce in equilibrium and what price will be established for a…
- Suppose the inverse demand function for two Cournot duopolists is given by P = 10 – (Q1 + Q2) and their costs are zero. A. What is each firm’s marginal revenue and reaction functions? B. Determine the Cournot equilibrium outputs and equilibrium price. What is the implication of this model?Consider a market where the inverse demand function is P = 100 - Q. All firms in the market have a constant marginal cost of $10, and no fixed costs. Compare the deadweight loss in a monopoly, a Cournot duopoly with identical firms, and a Bertrand duopoly with homogeneous products.Consider a dominant firm facing an inverse demand P = 100-Q, with marginal cost 18. The supply of competitive fringe is P = 10 + 4Q. a. Find the market shares of dominant firm and competitive fringe
- The market demand curve faced by Cournot duopolistsis: Qd = 400 - 8P where Qd is the market quantity demanded and P is the commodity's price in dollars. a. Firm A has a constant marignal cost of $10. What is the equation for Firm A's reaction function with qa expressed as a function of qb? b. Firm B has a constant marginal cost of $7.50. What is the equation for Firm B's reaction function with qb expressed as a function of qa? c. What quantity of output will each firm produce in equilibrium? What price will be established for the commodity?Suppose a single firm produces all of the output in a contestable market. Analysts determine that the market inverse demand function is P = 400 -4Q, and the firm’s cost function is C(Q) = 16Q. Determine the firm’s equilibrium price and corresponding profits.Price: $ Profits: $Assume that the market demand and the costs of the duopolists are: P=120-0.4(QA + QB) TCA=5QA TCB= 0.2Q2B Also assume that firm B is the sophisticated leader, Determine: a. The reaction curve of A ,the reaction curve of B and the profit function of A b. Stackelberg equilibrium output level for firm A and Stackelberg equilibrium output level for firm B c. The market price
