Suppose that the market demand is Qd 60-2P. Three identical firms with constant MC-2 operate in the market with Cournot competition. What is the output of firm 3? 14 12 10 8
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- A market is served by two firms in Cournot competition, each with a constant marginal cost of $100. The market inverse demand curve is P = 2,000 – 50 Q, where Q is the total market output produced by the two firms, q 1 + q 2. What is Firm 1's reaction function? A. q1 = 400 – 100q2 B. q1 = 19 – 0.5q2 C. q1 = 400 – 0.2P D. q1 = 210 – q2Q4. Consider two firms competing in a Cournot fashion. Each firm has MC=10 and the market demand is given by P=100-Q, where Q is the total market output. What is firm 1's Response function? a. q1=45-.5q2 b. q1=30 c. q2=45-.5q1 d. firm 1 will set p=MCAnswer the given question with a proper explanation and step-by-step solution. Suppose inverse demand is given by the following: P = 40 - 0.5Q There are two firms each with the same marginal cost. Marginal Cost is 10. Under Cournot competition, what is the output for firm one? 10 20 25 30
- Two firms compete under Cournot competition with constant marginal costs c_1 = 9 and c_2 = 3. The market demand is P=24-Q. a) Compute the market share of each firm, the market price, and the total quantity produced in the market. b) Compute the HHI index. c) Compute the Lerner index.Consider two identical firms (firm 1 and firm 2) that face a linear market demand curve. Each firmhas a marginal cost of zero and the two firms together face demand: P = 50 - 0.5Q, where Q = Q1 +Q2. Find the Cournot equilibrium quantity and market price for each firm.Consider a market with two identical firms: Firm A and Firm B. • The market demand is P = 340 – 2Q, where Q = qA + qB and the firms cost structure is such that MCA = ACA = 40 and MCB = ACB = 35. Determine the Cournot-Nash quantities, market price, and profits for each firm. (Use many decimal places in your calculations, but round your final answers to 2 decimal places.) (a) qA = qB = (B) P = (C) πA = (D) πB =
- Consider a market with two firms. Call them firm 1 and firm 2. The demand function describing the market is P = 216 – 0.4Q. Firms are initially identical, with the cost function C(q) = 140 + 40q. Calculate the total profits in the market. Under what conditions, the two firms may succeed to collude? How much would each firm earn if they could collude?There are two ma jor producers of corncob pipes in the world, both located in Herman, Missouri. Suppose that the inverse demand function for comcob pipes is described by p = 120 4q where q is total industry output and suppose that marginal costs are zero. What is the Cournot reaction function of firm 1 to the output, q2, of firm 2? (a) 120-4q22PROBLEM (5) (In a market with demand Q = 780 - p, there are 3 identical firms, A, B and C; each with a total cost function TC(Q) = 3(Q)^2. Calculate the market price under each of the 2 scenarios below, (i) B and C jointly form the fringe supply and A is the dominant firm in the dominant firm model. ( ii) They act as perfectly competitive firms -as if trying to maximize total surplus and minimize DWL- that is, their joint MC serves as the “market supply” for the competitive market. Please answer all the parts!
- **Practice** Consider a market with three firms. Each firm has a different cost function. We assume C1(q1) = 7q1, C2(q2) = q2 + 1, and C3(q3) = 3q3.Q1: What is the price-equillibrium under the assumption of the two companies colluding? What is the profit for each firm? Q2: Derive the output reaction curves for both firms and calculate the price-output equllibrium under this assumption. What is the profit for each firm?Suppose three firms compete in a homogeneous-product Cournot industry. The market elasticity of demand for the product is −2, and each firm’s marginal cost of production is $50. What is the profit-maximizing equilibrium price?