In 2004–2006, for the first time Boeing produced fewer planes than Airbus. If Boeing finds itself less profitable at 60 percent market share than at 45 percent, what is the likely impact on the Airbus-Boeing tactical competition?
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In 2004–2006, for the first time Boeing produced fewer planes than Airbus. If Boeing finds itself less profitable at 60 percent market share than at 45 percent, what is the likely impact on the Airbus-Boeing tactical competition?
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- An industry has four firms, each with a market share of 25 percent. There is no foreign competition, entry into the industry is difficult, and no firm is on the verge of bankruptcy. If two of the firms in the industry seek to merge, this action would most likely be opposed by the government because the Herfindahl index for the industry is Multiple Choice 2,500 and the merger would increase the index by 1000. 5,000 and the merger would increase the index by 2000. 3,000 and the merger would increase the index by 2000. 2,500 and the merger would increase the index by 1250.An oligopoly firm faces a kinked demand curve with the two segments given by: P = 230 – 0.5Q and P = 280 – 1.5Q. The firm currently has a constant marginal cost, MC of $150. State the assumptions of the kinked demand model in terms of price-matching and elasticity.Compare and contrast Price and Quantity determination in a strategic situation like an oligopoly and that in a purely competitive situation. Give examples for each type of scenarios.
- Consider a duopoly where firms compete in prices and firms do not have any capacity constraints. Market demand is P(Q)=45-4Q, and each firm faces a marginal cost of $9 per unit. How much is each firm's total variable cost if firms equally divide the market at Nash equilibrium?In relation to bargaining power with Buyers. Explain each point: -They purchase a substantial portion of an industry's total output. -Sales of the product they purchase represent a significant portion of the seller's annual revenue. -They could opt for another product paying little or no switching cost. -The industry's products are not differentiated or are standardized and the buyers pose a credible threat in the event that they integrate backward into the industry of the sellers.The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in the domestic market for large utility pumps. Each firm has constant long-run costs, so that MC0 = AC0. As competitors in a duopoly, there are a number of models to determine output and prices. Assume that the Bertrand duopoly model applies, so that they both set price equal to their marginal cost. Initial output in this market will be 16,000 per year (this is split between the two firms), at a price of $300. (a) At the initial equilibrium, what is total surplus (consumer surplus plus producer surplus)? Suppose that Brooks, Inc. and Spring, Inc. form a joint venture, River Company, whose utility pumps replace the output sold by the parent companies in the domestic market. Assuming that River Company operates as a monopolist and that its costs equal MC0 = AC0, what is: (b) The price? (c) The output? (d) Total profit? (e) The resulting deadweight loss from River Company operating as a…
- The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in the domestic market for large utility pumps. Each firm has constant long-run costs, so that MC0 = AC0. As competitors in a duopoly, there are a number of models to determine output and prices. Assume that the Bertrand duopoly model applies, so that they both set price equal to their marginal cost. Initial output in this market will be 16,000 per year (this is split between the two firms), at a price of $300. Suppose that Brooks, Inc. and Spring, Inc. form a joint venture, River Company, whose utility pumps replace the output sold by the parent companies in the domestic market. Assuming that River Company operates as a monopolist and that its costs equal MC0 = AC0, what is: (b) The price?The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in the domestic market for large utility pumps. Each firm has constant long-run costs, so that MC0 = AC0. As competitors in a duopoly, there are a number of models to determine output and prices. Assume that the Bertrand duopoly model applies, so that they both set price equal to their marginal cost. Initial output in this market will be 16,000 per year (this is split between the two firms), at a price of $300. Suppose that Brooks, Inc. and Spring, Inc. form a joint venture, River Company, whose utility pumps replace the output sold by the parent companies in the domestic market. Assuming that River Company operates as a monopolist and that its costs equal MC0 = AC0, what is: (e) The resulting deadweight loss from River Company operating as a monopoly?The figure below shows the market conditions facing two firms, Brooks, Inc., and Spring, Inc., in the domestic market for large utility pumps. Each firm has constant long-run costs, so that MC0 = AC0. As competitors in a duopoly, there are a number of models to determine output and prices. Assume that the Bertrand duopoly model applies, so that they both set price equal to their marginal cost. Initial output in this market will be 16,000 per year (this is split between the two firms), at a price of $300. Suppose that Brooks, Inc. and Spring, Inc. form a joint venture, River Company, whose utility pumps replace the output sold by the parent companies in the domestic market. Assuming that River Company operates as a monopolist and that its costs equal MC0 = AC0, what is: (c) The output? (d) Total profit?
- 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.Q2. Consider a two-firms Cournot model with constant returns to scale. Assume also that the inverse demand function is P = 100 – 2Q, with marginal cost equal to 20for both firms, where Q = q1 + q2 . c) Calculate Stackleberg equilibrium. Draw a picture of this outcome using best-response functions and isoprofit contours.HP and Sony compete primarily by price. Each firm must choose either a high price or a low price simultaneously. Use the following information to create the profit matrix: If HP and Lenovo both set high prices, HP’s profit is $40 million and Sony’s profit is $35 million. If HP sets high price and Sony sets low price, HP’s profit is $25 million and Sony’s profit is $40 million. If HP sets low price and Sony sets high price, HP’s profit is $50 million and Sony’s profit is $10 million. If HP and Sony set low prices, HP has $20 million and Sony has $15 million. Please answer the follow questions: Does Sony have a dominant strategy? HP? If so, which one? If HP and Sony maximize their profits non-cooperatively, what is the Nash-equilibrium for this profit matrix? Instead, if HP and Sony maximize their joint profits cooperatively, what is the equilibrium? Assume they keep their agreements.