Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 9, Problem 8CACQ
(A)
To determine
When the firm 2 marginal cost increased to $210 But firm 1 marginal cost remain constant at $200 , change in each firm's equilibrium output and profit in Cournot oligopoly is to be explained.
(B)
To determine
When the firm 2 marginal cost increased to $210 and firm 1 marginal cost remain constant at $200 ,change in firm's equilibrium output and profit in Sweezy oligopoly is to be explained.
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Consider a homogeneous-product duopoly where each firm initially produces at a constant marginal cost of $200 and there are no fixed costs. Determine what would happen to each firm’s equilibrium output and profits if firm 2’s marginal cost increased to $210 but firm 1’s marginal cost remained constant at $200 in each of the following settings: a. Cournot duopoly. b. Sweezy oligopoly.
The inverse market demand in a homogeneous-product Cournot duopoly is P = 100 – 2(Q1 + Q2) and costs are C1(Q1) = 20Q1 and C2(Q2) = 30Q2.
a. What is the reaction function for each firm?
b. What is each firm’s equilibrium output?
c. What is the equilibrium market price?
d. What is the profit each firm earns in equilibrium?
In a homogeneous products duopoly, each firm has a marginal cost curve MC= 10, i= 1,2. The market inverse demand curve is P= 50−Q, where Q = Q1+Q2.
a) What would be the equilibrium price in this market if firms acted as price-taking firms?
b) What would be the equilibrium price in this market if the two firms acted as a profit-maximizing cartel? Obtain the Lerner index
c) What would be the Cournot equilibrium quantities, price and profit in this market? Obtain the Lerner index of each firm and compare it to b)
Chapter 9 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 9 - Prob. 1CACQCh. 9 - Prob. 2CACQCh. 9 - Prob. 3CACQCh. 9 - Prob. 4CACQCh. 9 - Prob. 5CACQCh. 9 - Prob. 6CACQCh. 9 - Prob. 7CACQCh. 9 - Prob. 8CACQCh. 9 - Prob. 9CACQCh. 9 - Prob. 10CACQ
Ch. 9 - Prob. 11PAACh. 9 - Prob. 12PAACh. 9 - Prob. 13PAACh. 9 - Prob. 14PAACh. 9 - The opening statement on the website of the...Ch. 9 - Prob. 16PAACh. 9 - Prob. 17PAACh. 9 - Prob. 18PAACh. 9 - Prob. 19PAACh. 9 - Prob. 20PAACh. 9 - Prob. 21PAACh. 9 - Prob. 22PAACh. 9 - Prob. 23PAACh. 9 - Prob. 24PAA
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