1. In a duopoly market, two firms produce the identical products, the cost function of firm 1 is:C, = 20q1, the cost function of firm 2 is: C2 = 20g2, the market demand function is: P = 500 –2Q, here Q = q1 + 92.In a Bertrand model, the two firms set their price simultaneously, assume both firms do nothave production capacity limits, and there is no collusion. What is the market equilibrium priceand quantity?а.b. If the two firms decide to form a Cartel, i.e. they want to maximize the profit of the wholeindustry, and then split the production and profit evenly. What is the market price? What is theindustry's total quantity produced? What is the quantity produced and profit of each firm?If firm 1 will produce at the production level from (b) for sure, what is firm 2's optimalproduction decision? What is firm 2's maximum profit?C.

In the Bertrand model, both firms determine prices simultaneously. If the product is homogenous,…

In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, = 2091, the cost function of firm 2 is: C2 = 2092, the market demand function is: P = 500 – 2Q, here Q = qı + 92. %3D In a Bertrand model, the two firms set their price simultaneously, assume both firms do not have production capacity limits, and there is no collusion. What is the market equilibrium price and quantity? If the two firms decide to form a Cartel, i.e. they want to maximize the profit of the whole industry, and then split the production and profit evenly. What is the market price? What is the industry's total quantity produced? What is the quantity produced and profit of each firm? If firm 1 will produce at the production level from (b) for sure, what is firm 2's optimal production decision? What is firm 2's maximum profit?

In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, = 2091, the cost function of firm 2 is: C2 = 2092, the market demand function is: P = 500 – 2Q, here Q = qı + 92. %3D In a Bertrand model, the two firms set their price simultaneously, assume both firms do not have production capacity limits, and there is no collusion. What is the market equilibrium price and quantity? If the two firms decide to form a Cartel, i.e. they want to maximize the profit of the whole industry, and then split the production and profit evenly. What is the market price? What is the industry's total quantity produced? What is the quantity produced and profit of each firm? If firm 1 will produce at the production level from (b) for sure, what is firm 2's optimal production decision? What is firm 2's maximum profit?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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