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 p in the below figure:
Q: Collusion occurs when firms ________. a. compete with one another by setting a price slightly lower…
A: Collusion is a non-competitive olligopoly theory. In non-collusive olligopoly, firms compete with…
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: Evaluate the following: “Since a rival’s profit-maximizing price and output depend on its marginal…
A: Total cost= fixed cost + variable cost As marginal cost does not include fixed costs and since a…
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: Consider a market where two firms (A and B) compete in prices. Each firms produces a differentiated…
A: Marginal cost (MC) is needed in order to determine the equilibrium price and equilibrium quantity.…
Q: Consider two identical firms (firm 1 and firm 2) that face a linear market demand curve. Each firm…
A: The economic model in which firms choose their quantity by considering the quantity set by their…
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: 7. Two firms are competing in a market where the model of competition is Cournot. The inverse demand…
A: In Cournot duopoly, each firm competes in quantity and maximize profit by producing output where…
Q: Suppose three firms compete in a homogeneous-product Cournot industry. The market elasticity of…
A: Given: Number of firms =3 Market elasticity of demand (Ed) = -2 Marginal Cost (MC)= $50
Q: Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given…
A:
Q: Two firms, Alpha Mowers and Beta Mowers, sell qa and qg identical lawnmowers (respectively). Market…
A: P = 150 - Q = 150 -qa -qb At profit maximisation, Marginal revenue = marginal cost
Q: 10Two firms produce differentiated products. The demand for each firm’s product is as follows: …
A: q1=20-2p1+p2q2=20-2p2+p1C(q)=TC=5qMC=dTCdqMC=5TR1=p1q1 =p1(20-2p1+p2)…
Q: Consider two identical firms (firm 1 and firm 2) that face a linear market demand curve. Each firm…
A: As given Demand function is P = 50 - 0.5Q MC1 = MC2 = 0 and Q = Q1 + Q2 In the cournot equilibrium…
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: Show analytically that equilibrium price under Cournot is greater than price under perfect…
A: Answer in step 2
Q: Consider two firms that produce the same good and compete setting quantities. The firms face a…
A: The Cournot model of oligopoly implies that competing companies generate a homogenous product, and…
Q: Question 1 Consider two identical firms (firm 1 and firm 2) that face a linear market demand curve.…
A: We have demand function P=150-0.25Q MC=0 for both the firms.
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: Consider an industry with only two firms: firm A and firm B. The industry’s inverse demand is P(Q) =…
A: Demand : P(Q) = 400 − 1/10Q P = 400 − 0.1Q Q=Q1+Q2 P = 400 − 0.1(Q1+Q2) P = 400 − 0.1Q1-0.1Q2 MC=10…
Q: Two firms (Firm A and Firm B) operate in the same market and produce substitute products. Each firm…
A: Prisoner dilemma occurs when individuals interest do not match with collective interest. Both…
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: Two firms compete in a market to sell a homogeneous product with inverse demand function P = 600 −…
A: Given, inverse demand function P = 600 – 3Q MC = 300…
Q: Consider a market with two firms. Each firm is located at one end of a line with lenght one. There…
A: It is assumed that there are two firms A and B located at one end of a line with length "1". Mass…
Q: Consider two firms that produce the same good and compete setting quantities. The firms face a…
A: P(Q) =1 − Q When two firms are competing by choosing Quantities together they are playing cournot.…
Q: Consider a market with two horizontally differentiated firms, X and Y. Each has a constant marginal…
A: One of the most well-known models of oligopoly is Bertrand. Under this, the firms compete with each…
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: Suppose that market demand is given by P=120-Q/3. The two identical firms in the market both have…
A: In the Cournot competition, the firms compete on the basis of output.
Q: Suppose we have two identical firms A and B, selling identical products. They are the only firms in…
A: Market demand function P=287-Q ........(1) There are only two firm in the market. Firm A and firm…
Q: PROBLEM (5) (In a market with demand Q = 780 - p, there are 3 identical firms, A, B and C; each with…
A: The market price is the current market price at which an item or service can be bought or sold.…
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: Assume that the competition between Boeing and Airbus can be characterized by the following matrix…
A: Given information There are two players - Boeing & Airbus The payoff matrix is given below:…
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: Suppose there are two firms operating in the same market and compete over prices. the firms sell a…
A: q1=-1.5p1+p2+273q2=0.5p1-1.5p2+293TR1=p1q1 =p1(-1.5p1+p2+273)…
Q: Consider two identical Cournot firms that have zero marginal cost facing the market inverse demand…
A:
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: Cournot competition: P=200-Q (hint: Q is industry output), both firms have constant MC=5. What are…
A: In Cournot duopoly, two firms on quantity and produce output as per their best response functions.
Q: The market for widgets consists of two firms that produce identical products. Competition in the…
A: We have, P = 280-2(Q1+Q2) C1(Q1) = 3Q1 and C2(Q2) = 2Q2 A) Computation of marginal revenue for each…
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: An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's cost function is…
A: In the Cournot model, firms compete in terms of quantities and each firm tries to produce such…
Q: An industry has two firms. Firm 1's cost function is c(y) = 3y + 200 and firm 2's cost function is…
A: Profit maximizing quantity is such quantity where marginal revenue equals marginal cost.
Q: Consider an industry that consists of 3 tirms facing a demand curve P = 80 - Q. All three firms have…
A: If firms 2 and 3 merge then the production will take place only in firm 2 because of lower marginal…
Q: Initially there are six firms producing differentiated products. The demand function for the good…
A: There are 6 firms . Demand function of each firm : qi = 10 - 2pi + 0.3 (P5 ) where , P5 = sum of…
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…
Step by step
Solved in 3 steps
- Kate and Alice are small-town ready-mix concrete duopolints. The market demand tunction is o- 20,000 - 200Pwhere Pis the price of a cubic yard of concrete and Ois the number of cubic yards demanded per year. Marginal cost is sa0 per cubic yard. Suppose Kate onters the market first and chooses her output belore Alice. What is the difference in Alice's profit when Kata enters the market tirst, compared to when they simultanecusly select ther outputa? When Kate entors the markat first, Alice's profit is $3,888.a0 lower. O When Kate enters the market fest, Alice's profit is 513,333.33 lower. O When Kate enters the market first, Alice's profit is $5,000 lower. O When Kate onters the market first, Alice's proft is $1.111.11 higher,250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 7 8 9. 10 QUANTITY (Fire engines) Gilberto increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Gilberto's Fire Engines were a competitive firm instead and $100,000 were the market price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantity and, thus, total revenue. O True O False acer Σ 2. 1. PRICE (Thousands of dollars per fire engine)Economics QUESTION 16 Firms A and B engage in Stackelberg competition, where p = 90 – 40 MC. = S10o MC. = $26: Firm A is the Stackelberg leader. What is the market price? O $18 O $42 O $34 O $50
- WEBCAM RECORDING Industrial Economics da 6 A market is characterised by an inverse demand curve p =8 – 2Q where Q is total quantity. Two firms, A and B, are competing à la Cournot and TCA(qA) = 29A and TCB(qB) = q ta non %3D data Total profits n (1.e. the sum of profit for the two firms) are equal to: ggio max. ontrassegna O (a)n = nda %3D O (b) = 16 O (c)N = 4 O (d) = 9 Precedente Successivo300 270 240 210 180 150 120 90 60 30 0 20 MC 32 40 50 60 70 80 The figure shows MC, MR and ATC curves for Joe's Good Enough Cafeteria, a firm that operates in a competitive market. If the firm is producing 50 units of output, increasing output by one unit would the firm's profit by $ Joe's SHORT RUN equilibrium quantity is equal to ATC Joe's LONG RUN equilibrium quantity will be MR If the firm is producing 70 units of output, increasing output by one unit would the firm's profit by $ and profit is $ and profit will be $usiness EconomicsQ&A LibraryTwo 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 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 = Firm A Output; qB = Firm B Output) they must produce since they are the only two firms in…
- In an advertising prisoners' dilemma game, O A. the two firms agree on the total advertising budget and split it equally O B. neither firm will advertise because both realize that it lowers profit O C. only one firm will advertise because the other firm sees the advertising expenditure as a waste O D. both firms will advertise and end up with lower profits than if neither advertisesQuestion 2 Firm behavior determines market structore. O True O FalseSuppose MPH Book Store is the only bookstore in the Kota Warisan area near XMU. Figure 3 shows the demand curve for economics books and MPH's Book Store marginal revenue (MR) curve and marginal cost (MC) curve. MPH's Book Store will maximize its profit and set the price of the economic book equal to and has a total annual revenue of 100 80 60 MC 40 20 D MR 20 40 60 80 100 120 Quantity (units per day) Figure 3 O a. $40, $1,600 O b. No correct answer O c. $60; $1,200 O d. $40; $800 Price and costs (dollars per unit)
- COURSE: MICROECONOMICS - Bertrand's ModelAssume that a market is supplied by 2 companies, whose total costs are: CTi = 100Respective demand of each is: q1 = 120 - 2p1 + p2 and q2 = 120 - 2p2 + p1It is requested to:(a) calculate the firms' profit and reaction function.(b) plot the market equilibrium price and reaction function(d) calculate equilibrium quantity produced by each firm(e) determine profits that both firms will have at equilibrium.Raphael's Fire Engines is the sole seller of fire engines in the fictional country of Pyrotania. Initially, Raphael produced eight fire engines, but he has decided to increase production to nine fire engines. The following graph shows the demand curve Raphael faces. As you can see, to sell the additional engine, Raphael must lower his price from $80,000 to $40,000 per fire engine. Note that while Raphael gains revenue from the additional engine he sells, he also loses revenue from the initial eight engines because he sells them all at the lower price. Use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial eight engines by selling at $40,000 rather than $80,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $40,000. 200 180 160 Revenue Lost 140 120 Revenue Gained 100 80 Demand 60 40 20 2 3 4. 6. 7 8 9 10 QUANTITY (Fire engines) PRICE (Thousands of…Mo increase production from 5 O True O False 6 fire engines because the dominates in this scenario. True or False: If alternatively Mo's HookNLadder were a competitive firm and $160,000 were the market price for an engine, decreasing its price from $160,000 to $120,000 would result in a decrease in the production quantity, but an increase in total revenue.