Suppose that there are two firms in the market. The market demand is given by P=220 - 2Q, where Q is the total output (Q=Q1+Q2). Each firm has an identical cost function, TCi=8Qi, i=1, 2. Consider the collusion, in which they decide the output level together to maximize the joint profit. If they divide the production into half, then each firm should produce Qi= _______ units in order to maximize the joint profit.
Q: Problem 02-06 algo Assume that total output is determined by this formula: number of workers x…
A: Given that: Output = Number of workers * Productivity Assuming there are initially 100 workers and…
Q: Ms. Blume and Mr. Simon both live in Iowa. In February, a car dealer in Iowa bought a new,…
A: GDP: GDP or gross domestic product is the sum of the value of all end commodities produced within…
Q: Decisions for Tomorrow Calculate the annual household cost of a carbon-free program if the program…
A: Cost of program = 6.4 Trillion $ Time = 10 years Population = 110 million
Q: Do you think it’s a good idea for high school students to have a credit card? What about college…
A: An individual who possesses a credit card is able to borrow money from a bank or other financial…
Q: In the graph below (the market for money), the 8 n 100 Rate of interest price of a dollar interest…
A: Equilibrium is where the demand curve intersects the supply curve. The money supply curve is…
Q: Calculate the total value of goods and services at current prices in this economy each year?…
A: Since you have posted a question with multiple sub-parts, we will provide the solution to only the…
Q: The Euro: its challenges and threats This part of the case study should include the future…
A: The foreign exchange market is a global over-the-counter marketplace where currency exchange rates…
Q: Please help with these two: 1. Consider a Duopoly model, in which two firms decide a quantity…
A: Prisoner's dilemma: A situation in game theory where two individuals or groups can both benefit from…
Q: Consider a Duopoly model, in which two firms decide a quantity simultaneously. The market demand is…
A: Equilibrium is where the demand curve intersects the supply curve. Profit is maximized where the…
Q: If the GDP deflator is equal to 100, then for that year nominal GDP is equal to real GDP. True or…
A: Nominal GDP is the value of GDP calculated in current price. Real GDP is the value of GDP…
Q: IS-MP Analysis: Interest Rates and Output - End of Chapter Problem The federal funds rate is 4%, and…
A: In economics, inflation refers to an rise in the general price level of prduct and services in an…
Q: 7.Draw a theoretical market for low-skilled labor along with a non-binding minimum wage. Indicate if…
A: A non-binding minimum wage refer to the situation where the market equilibrium wage rate is greater…
Q: O E. studies the statistical dependence of an outcome variable on an exogenous variable (or…
A: Regression is a statistical tool that is associated with dependent and independent variables. Here…
Q: Which of the following would be categorized as an implicit cost? a. not being able to spend your…
A: Implicit costs are the opportunity costs of using resources for a selected motive. opportunity cost…
Q: Which of the graphs (if any) show a surprising or seemingly incorrect relationship based on what you…
A: The GDP is the production of goods and services that is directly used by the consumer for the…
Q: Hint: Be sure that the new aggregate demand curve (AD,) is parallel to the initial aggregate demand…
A: The marginal propensity to consume is the proportion of disposable income that a person chooses to…
Q: In the model SIM of chapter 3 of the book of Godley, Wynne, and Marc Lavoie. 2012. Monetary…
A: In the SIM model of chapter 3, an increase in government expenditure (G) leads to an increase in…
Q: Suppose the marginal propensity to consume is 0.8 and there is a $120 billion increase in government…
A: MPC is the marginal propensity to consume. Aggregate demand is the sum of consumption, investment…
Q: Country United States Saudi Arabia France South Korea Japan Spain Greece Mexico China World average…
A: The average income per person in a given region or nation is expressed as per capita income. It is…
Q: If the price elasticity of supply is 0.2, and a price increase led to a 3% increase in quantity…
A: Elasticity measures the percentage change in quantity divided by percentage change in price. The…
Q: Explain why a government gross proceeds royalty on natural resource production could be considered…
A: Inflation refers to the increase in the general price level of goods and services over a period of…
Q: What is the value of the money multiplier if the target reserve ratios of all banks in the banking…
A: The quantity of money that banks may generate through lending is known as the "money multiplier," a…
Q: Firm B Low Price High Price Firm A rm B receives $ Low Price A: $14 million B: $14 million High…
A: A pareto outcome is the payoff where by deviating from the strategy no player can be better off…
Q: You estimated a regression with the following output. Source | SS df…
A: The regression line states the relationship between dependent and independent variables.
Q: 18- 10 Supply a) What is the equilibrium price and quantity? Demand 6 8 10 12 14 16 18 20 Quantity…
A: Equilibrium is achieved at a point where demand curve intersects the supply curve. At this point,…
Q: You won a prize in a contest! There are two choices: take the $500 prize today or wait one year and…
A: An interest rate is the cost of borrowing money, typically expressed as a percentage of the amount…
Q: Smith and Jones are stranded on a desert island. Each has in her possession some slices of ham (H)…
A: The utility is the strength of goods that satisfies the consumer's wants after consuming them. Thus…
Q: At the current interest rate, suppose the supply of money is less than the demand for money. Given…
A: The money market tends to be in equilibrium when the demand for money intersects the supply of…
Q: Throughout this problem set, let X = R2, and suppose a consumer faces a price vector p= (P1, P2) and…
A: The utility of a bundle represents the satisfaction derived by a consumer from the consumption of…
Q: Responding to the economic conditions in the United Kingdom in 1932, Friedrich Hayek and his…
A: Economic conditions describe the state of the economy during a specific time period, taking into…
Q: The average cost of a firm producing a product in an area declines as the output of that firm's…
A: Economies of scale that occur outside of a company but within the same sector are known as external…
Q: Suppose the demand for football tickets at a local college is…
A: Economists think of prices as balancing supply and demand. Markets tend to equilibrium because…
Q: using the toilet paper rise in demand in early 2020 due to thee pandemic, illustrate a diagram of…
A: The term "equilibrium" in economics refers to the situation where there is an equal amount of supply…
Q: The first table that follows shows government expenditures as a percentage of GDP for selected…
A: Fiscal Policy refers to the use of government spending and taxation to influence the economy. The…
Q: What is the equilibrium price?
A: Total revenue is the product of price and quantity. Profit is maximized where Marginal Profit is…
Q: Question 10 Plastic is a key component in the manufacture of children's dolls. A new technology is…
A: Demand curve is the downward sloping curve. Supply curve is the upward sloping curve. Equilibrium…
Q: You decide to open an individual retirement account (IRA) at your local bank that pays 8 % / year…
A: Present value will provide the current value of the flows of the cash with the consideration of the…
Q: Which of the following changes in personal income tax would lead to the smallest increase in…
A: Increase in consumption = Increase in disposable income * MPCWhere MPC is the marginal propensity to…
Q: 2. If you’re trying to gain access to a credit card before you turn 21, which of the suggestions…
A: A credit card is a type of payment card that enables the cardholder to transfer balances, make…
Q: 1. Why might citizens interested in maximizing econom efficiency be happy to invest their government…
A: Citizens interested in maximizing economic efficiency is probably glad to make investments their…
Q: Suppose an economy has a marginal propensity to consume of 0.66 along with $38,039 consumption…
A: After paying all applicable taxes to the federal, state, and local governments as well as any other…
Q: An endowment of $1,000,000M has been setup to fund ten engineering scholarships every year in a…
A: Present value is the value of investment in today's dollar. Future value is the value of investment…
Q: Why silicon valley bank shutdown?
A: Commercial bank Silicon Valley Bank had its main office in Santa Clara, California. With a 25.9%…
Q: What's the answer I can't see it
A: Demand for good X with respect to good Y is cross-price elastic: With every 1% increase in the price…
Q: Howard Bowen is a large-scale cotton farmer. The land and machinery he owns has a current market…
A: Accounting Cost vs. Opportunity Cost: Accountants keep trace of out-of-pocket costs, also known as…
Q: Sheila runs an ice cream stand in a monopolistically competitive market. The figure below displays…
A: In monopolistically competitive market, the sellers sell differentiated produces which are close…
Q: 2. a. In an economy, the CPI went from 150 in 2014 to 130 in 2015. Did this economy have inflation…
A: Consumer Price Index refers to the change in prices paid by the individual or consumer for the goods…
Q: Given a simple Keynesian spending multiplier of 2, how will GDP (Y) change when business investment…
A: The Keynesian spending multiplier states that economic development is promoted with an increase in…
Q: What does the value for the coefficient mean in the regression analysis of both the company ?…
A: Here there are two multiple regression models. The coefficients and their respective p-value,…
Q: Would love some help on how to approach this - thanks! The cash flows for three different…
A: The incremental rate of return method is used to check whether the higher-cost alternative is…
Suppose that there are two firms in the market. The market demand is given by P=220 - 2Q, where Q is the total output (Q=Q1+Q2). Each firm has an identical cost function, TCi=8Qi, i=1, 2. Consider the collusion, in which they decide the output level together to maximize the joint profit. If they divide the production into half, then each firm should produce Qi= _______ units in order to maximize the joint profit.
Step by step
Solved in 2 steps
- Two firms sells an identical product. The demand function for each firm is given: Q = 20 - P, where Q = q1 + q2 is the market demand and P is the price. The cost function for reach firm is given: TCi = 10 + 2qi for i = 1, 2. a) If these two firms collude and they want to maximize their combined profit, how much are the market equilibrium quantity and price? b) If these two firms decide their production simultaneously, how much does each firm produce? What is the market equilibrium price? c) If Firm 1 is a leader who decides the production level first and Firm 2 is a follower, how much does each firm produce? What is the market equilibrium price?suppose there are two firms that compete in prices, say firms 1 and 2, but that the firms produce differentiated products. Suppose that the demand for firm 1 is q1(p1,p2)=10-2p1+p2 and the demand for firm 2 is q2(p2,p1)=10-2p2+p1. Also, assume that firm 1 has a constant marginal cost of c1 = 2 and firm 2 has a constant marginal cost of c2 = 3. i. Solve for the Bertrand equilibrium in prices. ii. Now, suppose firms 1 and 2 merge and firm 1 will operate both firms and they will split the resulting profits equally. Will both firms agree to this merger or do they prefer the Bertrand outcome?Consider a duopoly where firms compete in prices and firms do not have any capacity constraints. Market demand is P(Q)=45-4Q, and each firm faces a marginal cost of $9 per unit. How much is each firm's total variable cost if firms equally divide the market at Nash equilibrium?
- Two firms - firm 1 and firm 2 - share a market for a specific product. Both have zero marginal cost. They compete in the manner of Bertrand and the market demand for the product is given by: q = 20 − min{p1, p2}. 1. What are the equilibrium prices and profits? 2. Suppose the two firms have signed a collusion contract, that is, they agree to set the same price and share the market equally. What is the price they would set and what would be their profits? For the following parts, suppose the Bertrand game is played for infinitely many times with discount factor for both firms δ ∈ [0, 1). 3. Let both players adopt the following strategy: start with collusion; maintain the collusive price as long as no one has ever deviated before; otherwise set the Bertrand price. What is the minimum value of δ for which this is a SPNE. 4. Suppose the policy maker has imposed a price floor p = 4, that is, neither firm is allowed to set a price below $4. How does your answer to part 3 change? Is it now…Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience, let's say Firm 1 is a dominant firm and Firm 2 is a follower. The market demand is given by P=110 - 5Q, where Q is the total output (i.e., Q=Q1+Q2). Each firm has an identical cost function, TCi=7Qi, i=1, 2. Each firm maximizes its profit by choosing the quantity. In this Stackelberg equilibrium, Firm 1 will sell __________ units.Consider a Duopoly model, in which two firms decide a quantity sequentially. For the convenience, let's say Firm 1 is a dominant firm and Firm 2 is a follower. The market demand is given by P=110 - 5Q, where Q is the total output (i.e., Q=Q1+Q2). Each firm has an identical cost function, TCi=7Qi, i=1, 2. Each firm maximizes its profit by choosing the quantity. In this Stackelberg equilibrium, Firm 1 will sell how many units.
- American Airlines and Braniff Airways are the two airlines operating flights from your region. Suppose that each company can charge either a high price for tickets or a low price. First, American Airlines will choose the price level. Following this, Braniff Airways will observe its competitor’s decision and choose the price level for its tickets. If both of the companies choose High, they earn $25,000 each. If they both choose Low, they earn $18,000 each. If the companies choose different levels of prices, the one choosing the high price will earn $15,000 and the one choosing Low will earn $30,000. a) Draw the game three. b) Solve the game by using backwards induction. c) If Braniff Airlines makes a promise to choose High if American Airlines chooses High, should American Airlines trust this promise? Explain.Two firms, Firm 1 and Firm 2, compete by simultaneously choosing prices. Both firms sell an identical product for which each of 100 consumers has a maximum willingness to pay of $40. Each consumer will buy at most 1 unit, and will buy it from whichever firm charges the lowest price. If both firms set the same price, they share the market equally. Costs are given by c; (q) = 16q;. Because of government regulation, firms can only choose prices which are integer numbers, and they cannot price above $40. Answer the following: a) If Firm 1 chooses pi = 32, Firm 2's best response is to set what price? b) If Firm 2 chooses the price determined in the previous question, Firm 1's best response is to choose what price? c) If Firm 1 chooses pi = 9, Firm 2's best response is a range of prices. What is the lowest price in this range? d) Now suppose both firms are capacity-constrained: Firm 1 can produce at most 42 units, and Firm 2 can produce at most 44 units. If firms set different prices,…Two firms, Firm 1 and Firm 2, compete by simultaneously choosing prices. Both firms sell an identical product for which each of 100 consumers has a maximum willingness to pay of $40. Each consumer will buy at most 1 unit, and will buy it from whichever firm charges the lowest price. If both firms set the same price, they share the market equally. Costs are given by C; (qi) = 16q¡ . Because of government regulation, firms can only choose prices which are integer numbers, and they cannot price above $40. Could you help me with these questions? a) If Firm 1 chooses Pi price? = 32, Firm 2's best response is to set what b) If Firm 2 chooses the price determined in the previous question, Firm 1's best response is to choose what price? c) If Firm 1 chooses p₁ = 9, Firm 2's best response is a range of prices. What is the lowest price in this range?
- Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each earn as profit? How does the price compare to the marginal cost? Joe and Rebecca are small-town ready-mix concrete duopolists. The market demand function is Qd = 10,000 – 100P, where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $25 per cubic yard. Suppose that Joe and Rebecca compete in quantities and competition in this market is described by Cournot model. What are Joe and Rebecca’s Nash equilibrium outputs? What is the resulting price? What do they each…Consider a "Betrand price competition model" between two profit maximizing widget producers say A and B. The marginal cost of producing a widget is 4 for each producer. Each widget producer has a capacity constraint to produce only 5 widgets. There are 8 identical individuals who demand 1 widget only, and individuals value each widget at 6. If the firms are maximizing profits, then which of the following statement is true: a) Firm A and Firm B will charge 4 b) Firm A and Firm B will charge 6 c) Firm A and Firm B will charge greater than or equal to 5 d) None of the options are correct. Explain clearly.Consider two firms that compete according to the Cournot model. Inverse demand is P (Q) = 16 − Q. Their cost functions are C (q1) = 2q1 and C (q2) = 6q2 (a) Solve for Nash equilibrium quantities of each firm (b) Suppose firm 2 becomes more inefficient and its cost function changes to C (q2) = xq2 where x > 6. How large must x be to cause firm 2 to not want to produce anything in equilibrium?