The type of market form which pizza industry co-relates to.

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Chapter 7, Problem 13PAA

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To explain: The type of market form which pizza industry co-relates to.

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Assume that two firms, Wilson and Spalding, can manufacture basketballs for the entire Norfolk market, and that the market is oligopolistic in structure. Market Demand: Q-120-P Total Costs: TC-200 Q the quantity of basketballs P the price of a basketball in $ US TC the total cost of producing a given quantity of basketballs (in $ US) Show all of your work in solving the problems below. 1) The Cournot Model: Now assume that the two firms are Cournot competitors, and that all the assumptions of the Cournot model are met: no firm entry, homogeneous goods, a single period, and that the firms choose the quantities of basketballs to supply. Now, how many basketballs will be sold by each firm and at what price? What will be the total revenues, total costs, and the profits for each of the two firms? Demonstrate the model using graphs. (See Figs. 9-3 to 9-10) 2) The Stackelberg Model: Assume that the two firms are Stackelberg competitors, and that Wilson is the Stackelberg leader and Spalding…