8 Imperfect Competition - End of Chapter ProblemConsider the Cournot-Stackelberg competing islands of Penang and Grenada discussed in the previous problem. (Theinverse demand function remains P = 100 - qp - 9G.)a. Suppose Grenada's cost of production falls to $16, while Penang's remains at $20. Grenada's function will now be qG =42-0.59p - and Penang's will be qp = 40-0.5qG. Specify the two islands' equilibrium output levels.9G=29.339G=Incorrectqp =38b. Suppose Grenada's cost of production remains at $20, while Penang's falls to $16. Grenada's reaction function will nowbe qG = 40-0.5qp, and Penang's will be qp =Specify the two islands' equilibrium output levels.42 - 0.5qG25.33qp =Incorrect23

In this case, Cournot-Stackleberg model is used here. That means in this case, we have two reaction…

Imperfect Competition - End of Chapter Problem Consider the Cournot-Stackelberg competing islands of Penang and Grenada discussed in the previous problem. (The inverse demand function remains P = 100 - qp - 9G.) a. Suppose Grenada's cost of production falls to $16, while Penang's remains at $20. Grenada's function will now be qG = 42 – 0.5qp - , and Penang's will be qp = 40-0.59G - Specify the two islands' equilibrium output levels. 9G= 29.33 9G= Incorrect qp = 38 b. Suppose Grenada's cost of production remains at $20, while Penang's falls to $16. Grenada's reaction function will now 40-0.5qp, and Penang's will be qp = 42-0.5qG. Specify the two islands' equilibrium output levels. be qG = 25.33 qp = Incorrect 23

Imperfect Competition - End of Chapter Problem Consider the Cournot-Stackelberg competing islands of Penang and Grenada discussed in the previous problem. (The inverse demand function remains P = 100 - qp - 9G.) a. Suppose Grenada's cost of production falls to $16, while Penang's remains at $20. Grenada's function will now be qG = 42 – 0.5qp - , and Penang's will be qp = 40-0.59G - Specify the two islands' equilibrium output levels. 9G= 29.33 9G= Incorrect qp = 38 b. Suppose Grenada's cost of production remains at $20, while Penang's falls to $16. Grenada's reaction function will now 40-0.5qp, and Penang's will be qp = 42-0.5qG. Specify the two islands' equilibrium output levels. be qG = 25.33 qp = Incorrect 23

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

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