p= 00 -a. n firm has a marginal cost of $15 per unit. at is the Cournot equilibrium? Cournot equilibrium quantities for Firm 1 (9,) and Firm 2 (a2) are units units. (Enter numeric responses using real numbers rounded to two decimal places Cournot equilibrium price is at is the Stackelberg equilibrium when Firm 1 moves first? Stackelberg equilibrium quantities when Firm 1 moves first are units 2 -O units. - Stackelberg equilibrium price is

p= 00 -a. n firm has a marginal cost of $15 per unit. at is the Cournot equilibrium? Cournot equilibrium quantities for Firm 1 (9,) and Firm 2 (a2) are units units. (Enter numeric responses using real numbers rounded to two decimal places Cournot equilibrium price is at is the Stackelberg equilibrium when Firm 1 moves first? Stackelberg equilibrium quantities when Firm 1 moves first are units 2 -O units. - Stackelberg equilibrium price is

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

Chapter12: Price And Output Determination: Oligopoly

Section: Chapter Questions

Problem 2E

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6. Two firms, Firm 1 and Firm 2 and are competing in quantities. The demand they are facing is given by p=1-91-92, with p being the price of the good, and 9₁ and 92 the quantities produced by firm 1 and 2 respectively. The total cost of firm 1 is TC1 (91) = 9₁ and the one of firm 2 is TC₂ (92) = 292. (a) Find the Cournot equilibrium. (b) The government decides that it wants to make the market more competitive. As such it decides to offer to Firm 1 a license to become the leader in the market. The licence costs F, and if Firm 1 buys it, it will be allowed to choose its quantity before Firm 2. What is the maximum Firm 1 would be willing to pay for this license?
Suppose that Market demand for golf balls is described by Q= 90-3p,Where Q is measured in kilos of balls. There are two firms that supply the market. Firm 1 can produce a kilo of balls at a constant unit cost of $15 whereas firm 2 has a constant unit cost equal to $10.a. suppose firms compete in quantities. How much does each firm sell in a Cournot equilibrium? What is the market price and what are firms' profit?b. suppose firms compete in price. How much does each firm sell in a Bertrand equilibrium. What is market price and what are firms' profits?
The inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has a cost of production of C1= 15*Q1 and firm 2 has a cost of production of C2=20*Q2 a) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices?What are the profits of firm 1 and 2?b) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices?What are the profits of firm 1 and 2?
Two firms produce identical products at zero cost, and theycompete by setting prices. If each firm charges a low price,then both firms earn profits of zero. If each firm charges ahigh price, then each firm earns profits of £30. If one firmcharges a high price and the other firm charges a low price,the firm that charges the lower price earns profits of £50, andthe firm charging the higher price earns profits of zero. (a) Which oligopoly model best describes this situation?(b) Write this game in normal form.(c) Suppose the game is infinitely repeated. Can theplayers sustain the "collusive outcome" as a Nashequilibrium if the interest rate is 50 percent? Explain. Please answer the a, b and c parts.
Suppose that firms in a two-firm industry choose quantities every month, and each month the firms sell at the market-clearing price determined by the quantities they choose. Each firm has a constant marginal cost, and the market demand curve is linear of the form P = a - bQ, where Q is total industry quantity and P is the market price. Suppose that initially each firm has the same constant marginal cost. Further suppose that each month the firms attain the Cournot equilibrium in quantities. a) Suppose that it is observed that from one month to the next Firm 1’s quantity goes down, Firm 2’s quantity goes up, and the market price goes up. A change in the demand and/or cost conditions consistent with what we observe is: i) The market demand curve shifted leftward in a parallel fashion. ii) The market demand curve shifted rightward in a parallel fashion. iii) Firm 1’s marginal cost went up, while Firm 2’s marginal cost stayed the same. iv) Firm 2’s…
You are the manager of Firm B, which competes directly with Firm C to sell telecommunication services. From the two businesses' perspectives, the two products are indistinguishable. The large investment required to build production facilities prohibits other firms from entering this market. The inverse demand for telecommunication services is P = 600 – 3Q and both fims produce at a marginal cost of $300 per service and fixed costs of 100$. a) Find the Coumot equilibrium quantity per firm and market price.
Question 3:Suppose the inverse demand for a good is given by P = 50 – 4Q, where Q is the totalquantity supplied by all firms in the market. Suppose each firm in the market has a constantmarginal cost of 18.Q3 a) Assume the market consists of two firms that set their quantities simultaneously.Calculate the duopoly levels of production and the equilibrium price. Q3 b) Now assume firm 1 chooses its production level before firm 2 does. What will be theequilibrium quantities, price and profits in this case?Q3 c) Now instead suppose that the two firms compete over prices rather than quantities.What will be the equilibrium price and profits of firms 1 and 2 in this case? Finally, if firm 1manages to lower its marginal cost to 14, what will be the new equilibrium price, quantitiesand profits?
Suppose that there are two firms operating in the market of laptops, the first firm supplies quantity qi and the second firm supplies q2. The inverse demand function for laptops is P(q1 +q2)=2,000-2(q₁ +q2). The marginal costs are constant and equal to $400. a. b. c. Find the Cournot equilibrium outputs and price. Find the Bertrand equilibrium outputs and price. Suppose that the first firm is the leader choosing the output first, and the second firm is the follower choosing the output after observing the firm firm's choice. Find the new equilibrium output and price and compare them with those in parts a and b. Which of the equilibria is socially preferable?
QUESTION 4: The graph below shows the demand and costs data for a one of firms operating in a market with a highly differentiated product/All underlying work must be shown MC ATC $11.50 $10.00 $9.00 $6.00 D MR 200 400 700 s00 Quantity A) Refer to the graph above. If the firm in the graph above maximizes profit, it will produce units of output and charge price per unit. A) 400; $10 B) 600; $6 C) 900; $9 D) 600; $11.50 B) Refer to the graph above. At the profit maximizing output level, the firm from above will earn: A) zero economic profit. B) $900 total economic profit. C) $2,700 economic profit. D) $2,700 economic loss. C) Refer to your answer above. You can conclude that if there are no barriers to entry: a) new fims will enter this industry in the long run in a search of profit. b) existing firms will exit this industry in the long run because of the short-run losses. c) this industry is in long-run equilibrium, and there are no incentives to enter or exit. d) the price per unit of…
Question 3 The inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has al cost of production of C₁= 15*Q₁ and firm 2 has a cost of production of C₂=20*Q₂. 1) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices? What are the profits of firm 1 and 2? 2) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices? What are the profits of firm 1 and 2? 3) Suppose that firm play a Stackelberg game. First firm 1 sets the quantity in t=1, then, knowing which quantity firm 1 has set, firm 2 chooses the quantity in t=2. What are the Stackelberg quantities and prices? What are the profits od firm 1 and 2? Compared to part a) which firm benefits and which firm loses?
Duopoly quantity-setting firms face the market demand p=270 -a. Each firm has a marginal cost of $30 per unit. What is the Cournot equilibrium? The Cournot equilibrium quantities for Firm 1 (q,) and Firm 2 (92) are units and 92 = units. (Enter numeric responses using real numbers rounded to two decimal places.)
1. Two firms compete in price in a market for infinite periods. In this market, there are N consumers; each buys one unit per period if the price does not exceed $10 and nothing otherwise. Consumers buy from the firm selling at a lower price. In case both firms charge the same price, assume N/2 consumers buy from each firm. Assume zero production cost for both firms. A possible strategy that may support the collusive equilibrium is: Announce a price of $10 if the equilibrium price has always been $10; otherwise, announce the price as in Nash equilibrium of the one-shot Bertrand game. 1.a Let 6 be the discount factor. Find the condition on 6 such that the above strategy can indeed support the collusive equilibrium. Now suppose that Firm 2's marginal cost is $4, but Firm 1's marginal cost remains at zero. 1.b Find the condition on & under which Firm 2 will not deviate from the collusive equilibrium.