Consider a market for a homogeneous product with aggregate demand equal to p(Q)=65-6Q, where Q denotes the aggregate quantity put in the market by all the competitors. All the firms have access to the same technology and can produce at a total cost equal to C(q)=9+7q. There is one leader firm, firm 1, which sets in quantity in advance of the rest of the firms. The rest of the firms (followers) decided together after firm 1's quantity is known. How many follower firms (obtaining positive profits) can the market accommodate? [Write your answer as an integer number rounding down; e.g. 5,8 firms rounds to 5 firms.]
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- Suppose that there are two lemonade stands competing with one another via Bertrand (price) competition. There are 100 potential customers who walk by the two stands each day. Each of these customers will buy lemonade from whichever stand is cheapest as long as the price is less than $1. If they charge the same price then the customer chooses randomly between the two. The marginal cost of lemonade is the $0.25 for both stands. Fixed Costs are equal to $5 for each stand. What is the Nash equilibrium price of lemonade? a. $0.25 b. $1.00 c. $0.30 d. $0.35Ugly Dolls Inc. (UD) is a firm in Mytown that sells its products on a market under monopolistic competition. The cost function of UD is represented by TC = 100+10Q. Lately, because of the UD is making a big amount of profit, some firms enter the market to compete. Assume that Mytown engages in free trade in the dolls markets with Yourtown, who also faces a market with monopolistic competition. Because of this we can expect that, (a) The numbers of firms operating in this market will not change. (b) At equilibrium the profit of firms will increase. (c) The quantity of types of dolls available to consumers will increase. (d) All the above answers are correct.Suppose that a manufacturer produces two brands of a product, brand 1 and brand 2. Suppose the demand for brand 1 is x = 88 – p, thousand units and the demand for brand 2 is y = 98 – p, %D thousand units, where p, and p, are prices in dollars. If the joint cost function is C = xy, in thousands of dollars, how many of each brand should be produced to maximize profit? brand 1 thousand units brand 2 thousand units What is the maximum profit? thousand dollars Need Help? Read It Watch It
- Consider a homogeneous product industry with three firms 1, 2, and 3 that engage in simultaneous quantity competition. All firms incur identical constant marginal cost c and no fixed cost. Inverse linear demand is given by p = 1-q where q denotes total market output. (a) Find the equilibrium quantities, price, and profits. (b) Consider now a merger between firms 1 and 2, resulting in a duopolistic market structure. In fact, the merger gives rise to efficiency gains in the sense that the merged entity produces at marginal cost e c, where e < 1. The outsider to the merger still incurs marginal cost c. Find the post - merger equilibrium quantities, price, and profits. (c) Under what conditions does the merger reduce prices? Clearly explain the step by step solution, Please be sensible and give the complete answer for the quation asked. Please solve in detail. Dont give me the chatgpt answersIn the packaged energy drink industry, there are only two companies that have the same relative strength in the market, namely “Pocary” and “Ion-1000”. It is known that the demand function in the market for this industry is as follows: Q = 1000 - 0.1P. Where Q in the market is supplied by these 2 companies. It is known that the total cost of the company is TC = 2q2 while for Ion-1000 is TC = 2.5q2 a. If these 2 companies collude, what is the price and quantity offered in the market at equilibrium, and calculate the profit of each company? b. If these 2 companies compete, look for the best respond function of each company, and what is the price and quantity offered in the market at equilibrium, and calculate the profit of each company? c. Make it in the game theory form of the two strategies "Collusion" and "Compete" and look for "Nash Equilibrium" in just one game? (Note, if one is a collusion strategy, then the quantity produced collusion strategy is the same as the calculation result…please solve the question completely. Suppose an industry consists of two firms that compete in prices. Each firm produces one product. The demand for each product is as follows: q1 = 25 - 5p1 + 2p2 q2 = 25 - 5p2 + 2p1 The cost functions are C(qi) = 2 + qi for i = 1; 2. (a) Are the products produced by these firms homogenous or differentiated? (b) Find the best response function for each rm. (c) How does the price firm 1 sets change with its belief about the price of its competitor\'s product? (d) What are the Nash equilibrium prices? (e) What is the percentage markup of price over marginal cost here (this is called the Lerner index)? Do the firms have market power? Why does the Bertrand paradox of zero variable duopoly profits apply here? (f) Suppose the firms merged. What is the new price of products 1 and 2? (g) Explain intuitively why the price is higher under monopoly than under Bertrand duopoly? (h) Are total monopoly profits higher or lower than the sum of Bertrand duopoly…
- Consider a homogeneous product industry with three firms 1, 2, and 3 that engage in simultaneous quantity competition. All firms incur identical constant marginal cost c and no fixed cost. Inverse linear demand is given by p 1-q where q denotes total market output. (a) Find the equilibrium quantities, price, and profits. (b) Consider now a merger between firms 1 and 2, resulting in a duopolistic market structure. In fact, the merger gives rise to efficiency gains in the sense that the merged entity produces at marginal cost e c, where e < 1. The outsider to the merger still incurs marginal cost c. Find the post-merger equilibrium quantities, price, and profits. (c) Under what conditions does the merger reduce prices? no copy paste answers or chatgptFirm 1 is the leader and Firm 2 the follower in the model of price leadership. Thus, Firms 1 and 2 are the only two producers of a certain good; Firm 1 chooses the price p it will commit to maintain in the market; after having observed Firm 1's decision p, Firm 2 chooses the quantity yz it will produce. Here, the firms cost functions are as follows: c(y;)=3y, +y,?/2 and c2(Y2)= y2?/4. The inverse demand curve is p(Y)=70-Y. What is true about the quantity Firm 2 will produce at the equilibrium of this model? O a. It is between 40 and 42. O b. None of the other answers. It is between 44 and 45. O d. It is between 38 and 39. Oe. It is between 43 and 43.5.Suppose we have two identical firms A and B, selling identical products. They are the only firms in the market and compete by choosing quantities at the same time. The Market demand curve is given by P=477-Q. The only cost is a constant marginal cost of $16. Suppose Firm A produces a quantity of 66 and Firm B produces a quantity of 49. If Firm A decides to increase its quantity by 1 unit while Firm B continues to produce the same 49 units, what is the Marginal Revenue for Firm A from this extra unit? Enter a number only, no $ sign. Don't forget to include the negative sign if revenue decreases.
- Consider an industry with N firms that compete by setting the quantities of an identical product simultaneously. The resulting market price is given by: p = 1000 − 4Q. The total cost function of each firm is C(qi) = 50 + 20qi . (a) Derive the output reaction of firm i to the belief that its rivals are jointly producing a total output of Q-i . Assuming that every firm produces the same quantity in equilibrium, use your answer to compute that quantity. (b) Suppose firms would enter (exit) this industry if the existing firms were making a profit (loss). Write down a mathematical equation, the solution to which would give you the equilibrium number of firms in this industry. You don’t have to solve this equation.You manage a company that competes in an industry that is comprised of 3 equal-sized firms that produce similar products. A recent industry report indicates that the market is fairly saturated, in that a 10 percent industry-wide price increase would lead to a 22 percent decline in units sold by all firms in the industry. Currently, Congress is considering legislation that would impose a tariff on a key input used by the industry. Your best estimate is that, if the legislation passes, your marginal cost will increase by 1 dollar. Based on this information, what price increase would you recommend if the tariff legislation is passed by Congress? Instructions: Enter your response rounded to the nearest penny (two decimal places).Consider a market where two firms produce the same product, and compete by choosing the price to charge consumers. There are no capacity constraints and no fixed costs. Consumers purchase from the firm that charges the lowest price, Pmin Aggregate demand is given by Q(Pmin) = 600 – 30pmin. Both firms have marginal costs of c = 15. What is the aggregate quantity produced in this market? And what price do consumers pay? (a) p₁ = = 15, p2 = 20, Q = 150 (b) P1 = P2 = 15, Q = 150 (c) P₁ = P₂ = 20, Q = 0 (d) p₁ = 10, P2 = 15, Q = 300 (e) None of the above options is correct.