I need solutions D,E, F(I attached solutions of A.B.C) 4. In a duopoly market, two firms produce the identical products, the costfunction of firm 1 is: C = 30q1, the cost function of firm 2 is: C2 = 30q2,the market demand function is: P = 90 – Q, here Qa. Given any 91, what is firm 2's best response/rection function?b. Given any q2, what is firm 1's best response/rection function?c. If the two firms decide to set their quantities simultaneously (Cournot model),what are the Cournot equilibrium quantities and the market price?d. If firm 1 makes its production decision first, firm 2 produces based on firm l'sdecision (Stackelberg model), what are the equilibrium quantities and themarket price?In a Bertrand model, the two firms set their price simultaneously, assume bothfirms do not have production capacity limits, and there is no collusion. Whatare the equilibrium market quantity and market price?f. If the two firms decide to form a Cartel, i.e. they want to maximize the profitof the whole industry, and then split the production and profit evenly. What isthe equilibrium price and each firm's production?91 + 92.е. The inverse demand function is P = 90 – qi – q2 and C, = 30q1, C2 = 30q2.c) If Cournot model is followed, then solving (i) and (ii) will give the equilibrium quantity and price in themarket. Substituting (ii) in (i),b)For Firm 1, the best response function will be derived by using the profit maximizing condition, MR = MR.The marginal revenue is the first derivative of the revenue function and the marginal cost is the first derivativeof the cost function. The revenue function isq1=30-1 (30-글 q1)=> qı =30 – 15 + †q1TRỊ =P× q1=> q1 – 191 = 15=(90 – q1 - q2)qı3=> 791 =15=90q1 – q1 – qiq2=> qı =20Then, marginal cost isd TRỊMR| =As both the firms have identical marginal costs, then they will produce equal quantities. So, firm 1 and 2 willboth produce 20 units of good at equilibrium. The market price will be=90 – 291 - 92P=90 – (20 + 20)=90 – 40The marginal cost is 30.= 50For profit maximization,Thus, the market price is 50.MR1 =MC|=> 90 – 291 – q2 =30=> 60 – q2 =2qı=> qı =30 – q2.....- (i)a) Similarly, firm 2's best response function will be calculated the same way.The revenue function isTR2 =P× q2=(90 – q1 – q2)q2=90q2 – 92 – 9192The marginal revenue isMR2 =d TR2d 92=90 – 292 – qiThe marginal cost is 30.For profit maximization,MR2 =MC2=> 90 – 292 – qq =30=> 60 – q1 =2q2%=> 42 = 30-글1(ii)This is the best response function of firm 2.

In the Stackelberg model of oligopoly, the firm leader firm determines its output first given the…

In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, = 30qı, the cost function of firm 2 is: C2 = 30q2, the market demand function is: P = 90 – Q, here Q = q1 + q2. Given any q1, what is firm 2's best response/rection function? Given any q2, what is firm 1's best response/rection function? If the two firms decide to set their quantities simultaneously (Cournot model), what are the Cournot equilibrium quantities and the market price? If firm 1 makes its production decision first, firm 2 produces based on firm 1's decision (Stackelberg model), what are the equilibrium quantities and the market price? In a Bertrand model, the two firms set their price simultaneously, assume both firms do not have production capacity limits, and there is no collusion. What are the equilibrium market quantity and market price? If the two firms decide to form a Cartel, i.e. they want to maximize the profit of the whole industry, and then split the production and profit evenly. What is the equilibrium price and each firm's production?

In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, = 30qı, the cost function of firm 2 is: C2 = 30q2, the market demand function is: P = 90 – Q, here Q = q1 + q2. Given any q1, what is firm 2's best response/rection function? Given any q2, what is firm 1's best response/rection function? If the two firms decide to set their quantities simultaneously (Cournot model), what are the Cournot equilibrium quantities and the market price? If firm 1 makes its production decision first, firm 2 produces based on firm 1's decision (Stackelberg model), what are the equilibrium quantities and the market price? In a Bertrand model, the two firms set their price simultaneously, assume both firms do not have production capacity limits, and there is no collusion. What are the equilibrium market quantity and market price? If the two firms decide to form a Cartel, i.e. they want to maximize the profit of the whole industry, and then split the production and profit evenly. What is the equilibrium price and each firm's production?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.4P

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