Consider a single country and a single good. The demand curve for this good is given by QD = 144 - 4P. There are two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B has a marginal cost of $16. There are no fixed costs incurred by either firm. Firm A produces 16 units and firm B produces 32 units. The equilibrium price is $24. Total Profit for Firm A = $64 Total Profit for Firm B = $256 Assume that these firms compete in Cournot fashion. What is the consumer surplus? Show your work.
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Consider a single country and a single good. The
are two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B has
a marginal cost of $16. There are no fixed costs incurred by either firm.
Firm A produces 16 units and firm B produces 32 units.
The
Total Profit for Firm A = $64
Total Profit for Firm B = $256
Assume that these firms compete in Cournot fashion.
What is the
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- Consider a single country and a single good. The demand curve for this good is given by QD = 144 - 4P. Thereare two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B hasa marginal cost of $16. There are no fixed costs incurred by either firm. Assume that these firms compete in Bertrand fashion. Part V. What is the equilibrium price in the market now? Explain your reasoning. Part VI. How many units of output each firm produces? Show your work. Part VII. How much profit each firm makes now? Show your work. Part VIII. What is the consumer surplus? Show your work. Part IX. Under which competition, Cournot vs. Bertrand, social welfare is higher? Show your work.Consider a single country and a single good. The demand curve for this good is given by QD = 144 - 4P. Thereare two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B hasa marginal cost of $16. There are no fixed costs incurred by either firm. Assume that these firms compete in Bertrand fashion. Part I. What is the equilibrium price in the market? Explain your reasoning. Part II. How many units of output each firm produces? Show your work. Part III. How much profit each firm makes? Show your work. Part IV. What is the consumer surplus? Show your work.Consider a single country and a single good. The demand curve for this good is given by QD = 144 - 4P. Thereare two firms serving the market: Firm A and Firm B, where Firm A has a marginal cost of $20 and Firm B hasa marginal cost of $16. There are no fixed costs incurred by either firm. Assume that these firms compete in Cournot fashion. Part I. How many units of output each firm produces? Show your work. Part II. What is the equilibrium price in the market? Show your work.Part III. How much profit each firm makes? Show your work. Part IV. What is the consumer surplus? Show your work.
- The daily demand of two firms Firm 1 and Firm 2 producing two products is given by : D1 = 5 - 22P1 + 11P2 D2 = 50 - 22P1 + 11P2 These are the only firms producing the products. MC of Firm 1 is $0.5 per product and MC of Firm 2 is $2 per product. Q1. Calculate the equilibrium quantity and price of both the firms. You may assume that firms want to maximise the profits. Q2.Calculate producer surplus and deadweight loss.Two firms (called firm 1 and firm 2) are the only sellers of a good for which the demand equation is Here, q is the total quantity of the good demanded and p is the price of the good measured in dollars. Neither firm has any fixed costs, and each firm’s marginal cost of producing a unit of goods is $2. Imagine that each firm produces some quantity of goods, and that these goods are sold to consumers at the highest price at which all of the goods can be sold. A Cournot equilibrium in this environment is a pair of outputs (q1, q2) such that, when firm 1 produces q1 units of goods and firm 2 produces q2 units of goods, neither firm can raise its profits by unilaterally changing its output. Find the Cournot equilibrium. Determine whether the price at which the goods are sold exceeds marginal cost.Consider the following demand curve for good X which is produced by Firm 1 and 2: Price=100-2*0₁-2₂ The cost function for firm 1 is: Total Cost = 2* Q²₁ 1 and the cost for firm 2 is: Total Cost = 3* Q², If both firms agree to work together and maximize joint profits it would result in a market price of
- An Australian firm and a US firm produce a homogeneous good that is sold only in Japan. The marginal cost of producing the good is constant and equal to 30 in both countries. The demand curve for the good in Japan is: P = 120-Q where Q = QA +QUS represents the sum of the quantities. produced by the Australian and the US firms, respectively. (b) Assume the Australian firm can commit to an output before the US firm. Solve for the Stackelberg Equilibrium price, sales and profits of each firm in Japan. Price profit AUS2 ,output_US2 profit_US2 output_AUS2Take this hypothetical situation: Suppose that the supply side of the market for for electric energy is comprised of two sellers: Seller 1 and Seller 2. Let P be the price of one unit of electric energy, and Q be the quantity of electric energy. Seller 1 owns a hydropower factory with a constant marginal cost of $3 and can produce a maximum of 10 units of electric energy. In addition, the hydropower plant has a requirement of a minimum of 3 units of electric energy. Seller 2 owns a solar factory to produce electric energy. This factory has a constant marginal cost of $5 and can produce a maximum of 5 units of electric energy. With this given information, please sketch the market supply by aggregating the two individual supplies. Please label the graph clearly for slopes, kinks, intercepts, etc.Question 3 The inverse market demand for fax paper is given by P=100-Q. There are two firms who produce fax paper. Firm 1 has al cost of production of C₁= 15*Q₁ and firm 2 has a cost of production of C₂=20*Q₂. 1) Suppose firm 1 and firm 2 compute simultaneously in quantities. What are the Cournot quantities and prices? What are the profits of firm 1 and 2? 2) Suppose firm 1 and firm 2 compete simultaneously in prices. What are the Bertrand quantities and prices? What are the profits of firm 1 and 2? 3) Suppose that firm play a Stackelberg game. First firm 1 sets the quantity in t=1, then, knowing which quantity firm 1 has set, firm 2 chooses the quantity in t=2. What are the Stackelberg quantities and prices? What are the profits od firm 1 and 2? Compared to part a) which firm benefits and which firm loses?
- Take this hypothetical situation: Suppose that the supply side of the market for for electric energy is comprised of two sellers: Seller 1 and Seller 2. Let P be the price of one unit of electric energy, and Q be the quantity of electric energy. Seller 1 owns a hydropower factory with a constant marginal cost of $3 and can produce a maximum of 10 units of electric energy. In addition, the hydropower plant has a requirement of a minimum of 3 units of electric energy. Seller 2 owns a solar factory to produce electric energy. This factory has a constant marginal cost of $5 and can produce a maximum of 5 units of electric energy. A) With this given information, please sketch the market supply by aggregating the two individual supplies. Please label the graph clearly for slopes, kinks, intercepts, etc. B) Suppose that the price of geothermal increases. On the graph drawn in part A, show precisely how the supply curve changes. C) Suppose that the price of geothermal increases. In a market…Consider a local market where there are two local firms, A and B with the following cost functions producing homogenous good: CA=qA² +509A-9B² CB= 2qB² + 70qB+0.25qA² where q4 and qв represent the production levels of firm A and firm B, respectively. The market price of the good produced by two firms is equal to 150. Furthermore, suppose that the two firms act as price-takers (because firms from other locations also serve it). a) Briefly describe the relationship between the two firms (Hint: study the cost structure). b) Find the production levels and the profits of the two firms, assuming that they operate independently. c) Determine the production levels and the profits of the two firms, corresponding to a Pareto- efficient equilibrium in the absence of government intervention. Compare these results with those obtained in the previous point. d) Using the quantities calculated in point c) find the level of taxes and subsidies which would allow to reach the Pareto efficient…A company sells two goods (1 and 2) to two consumers (A and B). The consumers have reservation prices for the two goods given in the table below. Each consumer will purchase one unit of a good as long as its price is less than or equal to the consumer's reservation price for that good. The marginal cost of producing each good is $35 per unit. Consumer A Consumer B Good 1 $80 $60 Good 2 $40 $70 If the company plans to sell the goods separately, it should charge a price of $ 60 for good 1 and 5 70 for good 2. (Enter your responses as integers) If the company wants to use pure bundling by packaging the goods together and selling them only as a bundle, it should charge $ 120 for the bundle containing one unit of good 1 and one unit of good 2. (Enter your response as an integer) If the company wants to practice mixed bundling, it should charge a price of $ 80 for good 1, a price above $40 for good 2, and a price of $ 100 for the bundle containing one unit of each good (Enter your responses…