In Cerro Acuchimay, two stalls sell chicha de jora that have identical costs c; = 10y₁ + 20. mmm mmmmmmmmmm where i = 1, 2 and the demand is represented by y = 8-p. Despite the fact that there is a cartel solution consisting of reducing the quantity of chicha de jora offered, the possible strategies of the stalls are: be faithful to the cartel or deviate from the cartel's solution, that is, www offer more chicha de jora than the stalls in the agreement, thus increasing each position its offer unilaterally. In the agreed cartel solution, the stalls share the sales equally. www wwwwww www a) Calculate the benefits of the positions in each of the possible combinations of strategies. mmmmmm

In Cerro Acuchimay, two stalls sell chicha de jora that have identical costs c; = 10y₁ + 20. mmm mmmmmmmmmm where i = 1, 2 and the demand is represented by y = 8-p. Despite the fact that there is a cartel solution consisting of reducing the quantity of chicha de jora offered, the possible strategies of the stalls are: be faithful to the cartel or deviate from the cartel's solution, that is, www offer more chicha de jora than the stalls in the agreement, thus increasing each position its offer unilaterally. In the agreed cartel solution, the stalls share the sales equally. www wwwwww www a) Calculate the benefits of the positions in each of the possible combinations of strategies. mmmmmm

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 3E

See similar textbooks

Similar questions

Suppose the market demand for a product is Q(P) = 120 – P. There are no fixed costs of operating in this industry, but there are variable costs VC(Q) = 20Q. (b) Suppose there are two firms A and B in this industry, with identical costs functions (as above), who are thinking of colluding to maintain the monopoly quantity. What profits would they be able to make if they would split the monopoly quantity equally, i.e. QA = QB = QM/2? (d) Is the cartel as described in (b) sustainable if the firms interact only once? Justify and then interpret your answer. PLEASE ONLY ANSWER D SINCE I ALREADY UNDERTAND B
There are two firms in the blastopheme industry. The demand curve for blastophemes is given by p=2100-3q. Each firm has one manufacturing plant and each firm i has a cost function C(qi)=qi2 , where qi is the output of firm i. The two firms from a cartel and arrange to split total industry profits equally. Under this cartel arrangement, what will they do if they want to maximize joint profits?.
Consider an industry that consists of 4 firms, all competing over the same market, given by the following demand equation: P=80-3Q All firms have the same Total Cost Function, given by: TC₁=10q,+2q Suppose the firms decide to collude and voluntarily restrict output and raise price, in order to increase profits. a) What price will be charged by the members of the cartel? Assume the head of the cartel is fair and distributes output q, equally among the 4 firms (since they have identical costs). b)What is the output of each individual firm? c) What is each individual firm's profit? We know that there is a built-in incentive for cartel members to cheat on the cartel. If, as a result, the cartel breaks down: d) What price will be charged in the market? e) Assuming each firm captures an equal share of the market, what now is each firm's output, q? f) What now is individual firm profit? g) Illustrate your answer
Producers in three countries have formed a cartel to sell a highly-priced product. Suppose the world demand for the product is consistent with the equation: P=80-0.005QT NB: QT is the total cartel sales. The producers have managed to maximise profit at a price of R70 per unit. Suppose the members have the following total cost functions; Member 1: TC=7382 + 10Q + 0.05Q2 Member 2: TC= 9374 + 20Q + 0.02Q2 Member 3: TC=7432 + 30Q + 0.03Q2 : Derive: a) Marginal revenue b) Output of member 1,2 and 3 c) Total cartel output.
The cartel of copper exporting countries is called COPEC. As part of an international trade agreement, the United States has agreed to buy all the copper that COPEC wants to sell to the United States at a constant price of $100 per tonne. COPEC also sells copper in Europe at a price of $150 per tonne. COPEC acts just like a monopolist; if it finds it is profit maximising to sell in the United States at $100 per tonne and simultaneously to sell in Europe for $150 a tonne, what is the price elasticity of demand of COPEC’s copper in the European market?
Acme and Tartine are identical bakeries and are the only suppliers of baguettes in San Francisco. They have agreed to form a cartel: they jointly sell Q=16 baguettes and charge p=9 . Each bakery shall produce half of the joint quantity. Acme is tempted to cheat on the cartel agreement and increase its own production by 2 units. Acme knows that if they cheat, there is a 50% chance Tartine will catch them and force them to pay a fine of F that is taken out from their profits. If the market demand curve is Q=34−2P and the marginal cost of producing baguettes is constant and equal to 1 (assume there are no fixed costs), how big does F have to be to make Acme indifferent between cheating and not? F=?
Suppose the demand for oil is P=168Q-0.20. There are two oil producers who do not cooperate. Producing oil costs $8 per barrel. What is the profit of each cartel member?
Suppose the demand for oil is P=146Q-0.20. There are two oil producers who do not cooperate. Producing oil costs $7 per barrel. What is the profit of each cartel member? There is only one answer, not two.
Consider a duopolistic market with an inverse demand curve P(Q) = 460 − 4Qand constant marginal costs for each firm that are given by MC(Q) = 10.Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces 37.5 units and the prevailing market price is 160. How would the joint profits of these two firms change if they successfully formed a cartel? Change in joint profits: ? (Enter your answer rounded to two decimal places; include a negative sign if appropriate.)
Define cartel in the petroleum industry in India
Two dairy farmers produce milk for a local town with local milk demand given by Q =100-0.3333333333P(P denotes price measured in Rands, Q denotes the quantity measured in liters). Both farmers have the same cost function given by TC= 150+ 2Q(wheredenotes output). (a) Does joining a cartel offer any benefits to both farmers? Justify your answer
Mays and McCovey are beer-brewing companies that operate in a duopoly (two-firm oligopoly). The daily marginal cost (MC) of producing a can of beer is constant and equals $0.40 per can. Assume that neither firm had any startup costs, so marginal cost equals average total cost (ATC) for each firm. Suppose that Mays and McCovey form a cartel, and the firms divide the output evenly. (Note: This is only for convenience; nothing in this model requires that the two companies must equally share the output.) When they act as a profit-maximizing cartel, each company will produce 20 cans and charge $----- per can. Given this information, each firm earns a daily profit of $------ so the daily total industry profit in the beer market is $------------ . Oligopolists often behave noncooperatively and act in their own self-interest even though this decreases total profit in the market. Again, assume the two companies form a cartel and decide to work together. Both firms initially agree to produce…