QUESTION 6Consider a Cournot duopoly with the following inverse demand function: P = 120 - Q1 - Q2, where Q1 and Q2 are quantities produced by firms 1 and 2, respectively. The firms'marginal cost are identical and given by MC;(Q;) = 3Qi, where i is either firm 1 or firm 2. Based on this information, firm 1's reaction function is Q1 = - 0.202.QUESTION 7Two identical firms compete as a Cournot duopoly. The inverse market demand they face is P = 96 - 5Q. The cost function for each firm is C(g) = 6q. The price charged in thismarket will be QUESTION 1A firm produces and sells ballI bearings in two distinct markets, each of which is completely sealed off from the other. The demand curve for the firm's output in the first market isP1=555-8Q1, where P1 is the price of the product and Q1 is the amount sold in the first market. The demand curve for the firm's output in the second market is P2=235-2Q2,where P2 is the price of the product and Q2 is the amount sold in the second market. The firm's marginal cost curve is 5+Q, where Q is the firm's entire output (destined for eithermarket). The firm should sellunits in the first market at the price ofandunits in the second market at the price ofto maximize its profit.

QUESTION 6 Consider a Cournot duopoly with the following inverse demand function: P = 120 - Q1 - Q2, where Q1 and Q2 are quantities produced by firms 1 and 2, respectively. The firms' marginal cost are identical and given by MC;(Q;) = 3Qj, where i is either firm 1 or firm 2. Based on this information, firm 1's reaction function is Q1 = -0.2Q2.

QUESTION 6 Consider a Cournot duopoly with the following inverse demand function: P = 120 - Q1 - Q2, where Q1 and Q2 are quantities produced by firms 1 and 2, respectively. The firms' marginal cost are identical and given by MC;(Q;) = 3Qj, where i is either firm 1 or firm 2. Based on this information, firm 1's reaction function is Q1 = -0.2Q2.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 16.5IP

See similar textbooks

Similar questions

McDonald’s Global Compensation Practices: This feature explores McDonald’s efforts to develop a global compensation and performance appraisal strategy. McDonald’s, which has over 400,000 managers and senior employees working in 118 different countries, wants its new program to provide some standardization of compensation and performance appraisal for the firm, but at the same time, allow subsidiaries to tailor the program to local market conditions. Discussion Questions 1. What does McDonald’s hope to gain from having a global compensation and performance appraisal system in place? 2. How does the compensation and performance appraisal system introduced at McDonald’s allow managers to take local market differences into account? Why is this type of approach important to employees? 3. How does McDonald’s approach help the company to consider local differences when reviewing the performance of different country managers and awarding bonus pay?
A company manufactures two products. If it charges price p1 for product 1 and price p2 for product 2, it can sell quantities q1 = 55 − 3p1 + 2p2 and q2 = 75 + 2p1 − 2p2 for products 1 and 2, respectively. It costs the company $20 to produce a unit of product 1 and $65 to produce a unit of product 2. How many units of each product should the company produce? What prices should it charge, to maximize profit? Suppose the company must produce a minimum of 20 units of each product. How many units of each product should the company produce in that case? What prices should it charge, to maximize profit?
(Dominant Firm with Fringe Competition) The structure of competition in the market for product A follows the dominant firm model with competitive fringes, where there is one company that is a dominant player and there are many fringes companies that compete competitively. The total demand for product A in this market is expressed by P = 1200 - Q, while the supply function of the competitive fringe is expressed by Sf: qf = P - 240. If the dominant firm is known to have marginal costs as follows: MCd = 240 + 0.25qd b. What is the equilibrium price and the equilibrium quantity for the dominant firm? Show your answer mathematically and graphically. c. In that equilibrium, what is the supply of competitive fringes? How many total products are there on the market? What is the market share of the dominant company and the fringe company? Show your answer mathematically and graphically Thank you Bartleby!
(Dominant Firm with Fringe Competition) The structure of competition in the market for product A follows the dominant firm model with competitive fringes, where there is one company that is a dominant player and there are many fringes companies that compete competitively. The total demand for product A in this market is expressed by P = 1200 - Q, while the supply function of the competitive fringe is expressed by Sf: qf = P - 240. If the dominant firm is known to have marginal costs as follows: MCd = 240 + 0.25qd a. What is the minimum price level required by the competitive fringe to offer output? At what price level will the fringe company supply the entire market? Thank you bartleby!
(Dominant Firm with Fringe Competition) The structure of competition in the market for product A follows the dominant firm model with competitive fringes, where there is one company that is a dominant player and there are many fringes companies that compete competitively. The total demand for product A in this market is expressed by P = 1200 - Q, while the supply function of the competitive fringe is expressed by Sf: qf = P - 240. If the dominant firm is known to have marginal costs as follows: MCd = 240 + 0.25qd d. If the dominant company wants to limit competition from fringes, what can the dominant company do? What is the name of this strategy?
Q53 Assume that total sales for the cannabis industry in the year 2019 are $300 million and sales by the top four producers of cannabis are $50 million, $40 million, $30 million, and $30 million, respectively. We can conclude that Multiple Choice this sector is achieving economies of scale. firms in this industry likely collude with each other. allocative efficiency will be achieved. this industry is an oligopoly. the concentration ratio is 60 percent.
You are considering entry into a market in which there is currently only one producer (incumbent). If you enter, the incumbent can take one of two strategies, price low or price high. If he prices high, then you expect a $60K profit per year. If he prices low, then you expect $20K loss per year. You should enter if you believe demand is inelastic. you believe the probability that the incumbent will price low is greater than 0.75. you believe the probability that the incumbent will price low is less than 0.75. you believe the market size is growing.
Wonopoly and natural resource prices Suppose that a firm is the sole owner of a stock of a natural resource. a. How should the analysis of the maximization of the discounted profits from selling this resource (Equation 17.63 be modified to take this fact into account? b. Suppose that the demand for the resource in question had a constant elasticity form q(t)=a[p(t)]b . How would this change the price dynamics shown in Equation 17.67? c. How would the answer to Problem 17.7 be changed if the entire crude oil supply were owned by a single firm?
You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2 How much output should be produced in plant 1 to maximize profits? What price should be charged to maximize profits? Please show work for all three questions What price should be charged to maximize revenues?
What is the likelihood that firms would enter the market in the short-run? Use COVID-19 as a market condition to elaborate the likelihood and further elaborate an exit strategy if one exists.
Firm 1 is an incumbent in a market that Firm 2 is considering entering. Market demand is described by P = 500 − (q1 + q2) Firm 1 has no fixed costs of production. The entrant has a fixed cost of $15,000 that is incurred only if it enters the market. Each unit of output requires 1 unit of capacity to produce. There are no other inputs of production. Both firms buy capacity in the same market where its price is r = 50. The cost functions of the two firms are therefore: C1 (q1) = rq1 C2 (q2) = 15,000 + rq2 (a) Consider the Stackleberg version of this game: Firm 1 produces an output level first, which it cannot change. Firm 2 then makes its entry decision, and, if it enters, an output decision. Compute the quantity qL1 (the limit quantity) which if it was produced by Firm 1, would drive the profits of Firm 2, post-entry, to 0? Show your work. (b) Suppose, as in the "Capacity Expansion as a Credible Entry-Deterring Commitment" model, Firm 1 has the option of buying some capacity prior to…
A student in a managerial economics class calculated the four-firm concentration ratio and HHI for industries A and B. What is the proper conclusion she can draw from the following findings? Industry A Industry B Four-Firm C 0.9 1 HHI 3,200 2,500 Multiple Choice C4 is higher for industry A while the HHI is higher for industry B. This inconsistency must be due to a calculation error. The market power of firms in industry A is greater than that in industry B. Neither industry is perfectly competitive. Industry B is a monopoly.