Here is a market with three firms: 1, 2, and 3. The demand curve is P=100-Q. There is no fixed cost but the marginal cost 10 for all firms. Firm 1 is a leader firm so that it decides the quantity Q1 first. Then two firms respectively decide their quantities Q2 and Q3 simultaneously. 1) At an equilibrium (SPE), Q1 is Q2=Q3= 2) At the equilibrium, (the market quantity) Q= and (the market price) P= 3) The profit of firm 1 is while the profit of firm 2 and 3 respectively is
Q: Perrier and Apollinaris. Perrier and Apollinaris are two companies that sell mineral water in Tampa,…
A: As per given information:- Apollinaris Perrier High Price ($2) Low Price($2) High Price…
Q: There are two firms in a homogenous product market described by the demand function…
A: Initial calculation The quantity produced by firm1=q1 The quantity produced by firm2=q2 the inverse…
Q: Consider three firms producing the same good in a market competing a la Bertrand. They face an…
A: In Bertand competition, firms compete on price and each firm sells identical goods, meaning…
Q: Suppose that a manufacturer produces two brands of a product, brand 1 and brand 2. Suppose the…
A: We are going to find the profit maximizing P1 and P2 to answer this question.
Q: Question 1. Firm 1 and Firm 2 are the only two firms in a market where price is determined by the…
A: "Cournot model is a model of oligopoly. In this model, firms compete with each other with respect to…
Q: Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given…
A:
Q: Consider a market demand function P=100-0.01Q. There are only two firms in the market and each…
A: Answer: Given, Demand function: P=100-0.01QWhere,Q=q1+q2 Total cost functions of both the firms:…
Q: Two firms compete in a homogeneous product market where the inverse demand function is P = 20 − 5Q…
A: Since, you have posted a question with multiple sub-parts, we'll solve first three sub-parts for…
Q: Consider two firms facing the demand curve P = 50 - Q where Q = q1 + q2. The firms' cost functions…
A: In Cournot equilibrium, two firms compete in quantity and maximize their profit by producing at…
Q: Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: Consider a number of firms facing identical total cost function of the form: TC = Q3 -6Q2+10Q. The…
A: The money spent to purchase the factor of production to produce the goods and services is termed as…
Q: According to the Five Competitive Forces Model, the number of competitors in an industry affects a…
A: With an intention to analyze the competitive environment of a company, through various types/ways,…
Q: There are two firms that are considering entering a new market, and must make their decision without…
A: Answer: Suppose the two firms are firm 1 and firm 2 and two strategies are enter and do not enter.…
Q: Consider an inverse market demand P= 200 − 2Q. Suppose there are two firms in the market, firm 1 and…
A: We have, Demand function: P = 200-2Q Here Q = Q1 +Q2, Q1 = quantity of firm 1 and Q2 =quantity of…
Q: ms produce and sell differentiated products that are substitutes for each other. Their demand curves…
A:
Q: Raphael increase production from 8 to 9 fire engines because the dominates in this scenario. True or…
A: The graph below shows the purple shaded region which shows the loss in revenue due to a reduction in…
Q: Two firms produce the same good and compete against each other in a Cournot market. The market…
A: When two firms maximize joint profit, they act as a monopoly. Monopoly maximizes profit by producing…
Q: Perrier and Apollinaris. Perrier and Apollinaris are two companies that sell mineral water in Tampa,…
A: Given: Fixed cost for each company = $5000/period Available set of prices = $2(high) and $1(low) At…
Q: Suppose the inverse demand for a particular good is given by P= 1200-12Q. Furthermore, there are…
A: Answer -
Q: Consider an industry with with two, price-taking firms, the firms face an (inverse) demand function:…
A: Price taking firms are those firms which have to agree to the prices of goods and services…
Q: Suppose that there are two firms and they each have MC=2. No fixed costs. They each produce a…
A:
Q: Example 9.(Sequential Price Competition) There are two firms in a market, firm 1 and 2. Firm i = 1…
A: Solving Nash equilibrium
Q: Suppose the demand function for widgets is Q(p) = 60 – p, and all firms that produce widgets have…
A: We are given the demand function for widgets as Q(p) = 60 – pAnd, the cost function is given as C(q)…
Q: P= 14 - Q, where Q = Q1 + Q2. Both firms have the same structure of total cost functions as %3D…
A: Total cost form firm one is: TC1=2+2Q1 Total cost of firm two is: TC2=2+2Q2 Now, total cost will be:…
Q: You are the manager of a firm that produces products X and Y at zero cost. You know that different…
A: Since, you have posted a question with the multiple sub-parts, we'll solve first two sub-parts for…
Q: Suppose the inverse market demand is P (9₁.92) = 275-9₁-92 and each firm has a marginal cost of $70…
A: Introduction We have given two firms which compete with each other in terms of quantities. We have…
Q: Consider a market competing under Cournot Quantity Competition. There are two firms in this market:…
A: We have given demand function and marginal costs, we can find the profit function as
Q: Determine the reaction function for each firm. Calculate each firm's equilibrium level of output.…
A: An inverse demand function is the inverse function of a demand function. The inverse demand function…
Q: Consider two Cournot firms, Firm A and Firm B. Firm A has a marginal cost of 10 and Firm B has a…
A:
Q: 10 Firms A and B choose how much of a a homogenous good to produce at a marginal cost of 1. The…
A: Starting : Profit of firm 1 (25-qa-qb)qa-qa=0 dprofit1/dqa= 24-2qa-qb=0 qa = (24 - qb) / 2 If qb=0…
Q: An industry contains two firms and the inverse demand function for the firms output is P-180-30,…
A: Firms competes based on the output in Cournot model. The output in the Cournot model is Nash…
Q: Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given…
A: Marginal cost is the additional cost earned in order to produce an additional unit of output.
Q: There are two firms that are considering entering a new market, and must make their decision without…
A: (Note: Since the question has multiple parts the first three has been solved. Please resubmit the…
Q: An industry has two firms. Firm 1's cost unction is TC1(q1) = 2q1 + 500 and firm 2's cost function…
A: Cournot model is a part of oligopoly market. The firms compete on the basis of output in the Cournot…
Q: A market has the following demand function: P = 120 -Q where Qe = E-1 Qi a) Assuming Cournot-Nash…
A: An oligopoly market is one that has few large firms which are interdependent selling homogenous as…
Q: Consider the following market demand function: Q= 20-2P, where P is the market price. Suppose there…
A: Profit maximization is a process business firms undergo to ensure the best output and price levels…
Q: Two firms sells an identical product. The demand function for each firm is given: Q = 20 - P, where…
A:
Q: uppose that the market consists of 6 identical firms , that the market demand curve is P=200-2Q and…
A: Cournot oligopoly is a kind of imperfect competition in which it is assumed that the firms compete…
Q: Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given…
A: There are two firms, i.e., Firm 1 and Firm 2 The marginal cost of each firm is 30. Let's assume Q1…
Q: Question 3 Suppose a market demand function is given by Qp(P) = 1,000- 10P. The product can be…
A: QD(P)= 1000-10P C(Q)= 10,000+20Q
Q: Q.2 Two firms produce homogeneous products. The inverse demand function is: p(x₁, x₂) = a x₁- x2,…
A: Cournot is quantity competition, and Bertrand is price competition. Both are simultaneous move…
Q: There are two soda firms Pepsi and Coke in Bertrand completion . They face demand with the following…
A: An oligopoly market is one that has few large firms which are interdependent selling homogenous as…
Q: Q.1 Two firms produce homogeneous products. The inverse demand function is given by: p(x₁, x₂) =…
A:
Q: Suppose the inverse demand for a particular good is given by P = 1200 – 12Q. Furthermore, th are…
A: Stackelberg duopoly model is the competition between two firm such that one of them is a…
Q: Problem 3. Firm 1, Firm 2 and Firm 3 are the only competitors in a market for a good. The price in…
A: Perfect competition is the type of market competition where there is no limit on the number of firms…
Q: Two firms produce Bliffs. They compete by simultaneously choosing prices in a single period. The…
A: Monopoly is a market where by a single supplier dominates the whole market and duopoly is a market…
The demand curve is a graphical representation of the relationship between a good's or service's price and the quantity demanded over a given time period. A duopoly occurs when two companies own all, or nearly all, of the market for a specific product or service. A duopoly is the most basic type of oligopoly, defined as a market dominated by a small number of firms. A duopoly is a type of oligopoly in which two firms control a market in a dominant or exclusive manner. Because of its simplicity, it is the most commonly studied type of oligopoly. Duopolies sell to consumers in a competitive market where an individual consumer's choice has no bearing on the firm.
Step by step
Solved in 2 steps
- wo firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in the industry that manufacture this product. Their marginal cost (MC) is equal to their average cost (AC) and it is constant at MC = AC = X, for both firms. Market demand is given as Q = Y – 2P (where P = price and Q = quantity). Select any value for X between [21 – 69] and any value for Y between [501 – 999]. Using this information, calculate the Industry Price, Industry Output, Industry Profit, Consumer Surplus and Deadweight Loss under each of the following models: (a) Cournot Model error_outlineHomework solutions you need when you need them. Subscribe now.arrow_forward Question Two firms A and B produce an identical product (Note: Industry Output = Q). The firms have to decide how much output qA and qB (Note: qA =…5. N - Σ Consider a Cournot model in which N firms compete with each other by setting quantities. The market inverse demand function is P = a i=1 qi, where a > 0 and q; is the quantity of firm i. Firm i's cost function is quadratic: q, where c₂ > 0. (a) Suppose N 2. Find the Nash equilibrium. Show which firm produces more in the equilibrium and explain your result. (b) = Suppose N≥ 2 and ci = c for all i. Find the Nash equilibrium. Show whether the firms produce more or less than the constant marginal cost case where the cost function is cqi, with a>c>0.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.
- There are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?3. The (market) inverse demand function for a good is as follows: 12- 2q if q = [0,6], if q> 6. Pp(q) = { 12 There are two firms: N = {1,2}. Each firm's cost function is such that producing a units of the good incurs cost 2r. We consider the Cournot competition of the two firms. That is, they simultaneously choose their quantities. The firms are profit-maximizers. (1) Find a Nash equilibrium. (2) What is the size of the deadweight loss incurred by the Duopoly, compared to the competitive equilibrium allocation?10Two firms produce differentiated products. The demand for each firm’s product is as follows: Demand for Firm 1: q1 = 20 – 2p1 + p2 Demand for Firm 2: q2 = 20 – 2p2 + p1 Both firms have the same cost function: c(q) = 5q. Firms compete by simultaneously and independently choosing their prices and then supplying enough to meet the demand they receive. Please compute the Nash equilibrium prices for these firms.
- Suppose two firms producing identical products compete in prices. If demand can be written as Q = a - bP and each firm has constant marginal cost c, what would be firm 2's best response to firm 1's price pi in the below figure: Firm 2's Profit P2 Pı (a+bc)/2b Pi Firm 2's Price Select one: O a. none of the other answers O b. P2 = c O. P2 = P1 O d. P2 = P1 - E O e. P2 = (a+bc)/2b4. In 2056, there are two mining firms operating on the moon, extracting Helium 3. Once both firms have entered the market, they compete a la Cournot. The market inverse demand function is given by P(Q) = 8 - Q. Assume that both firms have the total cost functions C(q) =2+2q. Let the star superscript* denote equilibrium quantities/prices/profits. Which of the following statements is true? (a) q₁ =q2 = 4 (b) qt > 92 (c) p* = 6 (d) π₁ < π₂ (e) T₁ = π = 2 the CQuestion Consider a market with an inverse demand Function p = 60 -4*Q. There are two firms, an incumbent and an entrant. There is a constant variable cost of 6 and a unit capacity cost of 6. In the first stage, the incumbent chooses capacity. In the second stage, the entrant decides whether or not to enter and all active firms choose quantities (where the entrant also has to simultaneously choose its capacity in the second stage, if it enters). a. For a capacity of 5 units, what is the best response function of the incumbent in the second period? b. What is the Cournot-Nash equilibrium of the second stage if the incumbent chose a capacity of 5 units in the first stage conditional on the entrant entering? c. For a capacity of an arbitrary k units, what is the best response function of the incumbent? d. What is the Cournot-Nash equilibrium of the second stage if the incumbent chose a capacity of k units in the first stage conditional on the entrant entering? e. Solve for the subgame…
- 2. An industry contains two firms and the inverse demand function for the firms' output is P-180-30, where Q is the total output Suppose that firm I's cost and marginal cost functions are C(q)- 30q; and MC(q)-30, while firm 2's cost and marginal cost functions are C(q)-q² and MC(q)-2q2 a. Determine each firm's Nash equilibrium output. b. Determine each firm's profit at the Nash equilibrium output.Suppose that there are two firms in an industry and they face market demand y=400-0.5p where y=y1+y2 . The total cost functions of the firms are C1(y1)= 40y1 and C2(y2)= 2y22. a) Assume initially that the firms enter into Cournot competition. Calculate the equilibrium market price and each firm’s equilibrium output. That is, find y1c, y2sand pc.b) Calculate the equilibrium market price and each firm’s equilibrium output assuming that firm 2 is the Stackelberg leader and firm 1 is the follower. That is, find y1s, y2sand ps.The inverse market demand curve for salmon is given by P(Y) = 100 – 2Y, and the total cost function for any firm in the industry is given by TC(y) = 4y. a. Suppose that two Cournot firms operated in the market. What would be the reaction function for Firm 1 and the reaction function of Firm 2? (Notes: The marginal cost is not zero). If the firms were operating at the Cournot equilibrium point, what would the industry output and price be? b. For the Cournot case, draw the two reaction curves and indicate the equilibrium point on the graph