Two firms engage in Cournot competition in the Everlasting Gobstopper industry. The price elasticity of demand is -2. Firm 1 has a constant marginal cost of $365.00 per unit, and firm 2 has a constant marginal cost of $602.25 per unit. If the two firms are currently in equilibrium, what is firm 2's share of the market? Enter your answer as a decimal, rounded to two places if necessary.
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Two firms engage in Cournot competition in the Everlasting Gobstopper industry. The price
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- Two firms engage in Cournot competition in the Everlasting Gobstopper industry. The price elasticity of demand is-2. Firm 1 has aconstant marginal cost of $110.00 per unit, and firm 2 has a constant marginal cost of $181.50 per unit. If the two firms are currently inequilibrium, what is firm 2's share of the market? Enter your answer as a decimal, rounded to two places if necessary.______ Please show all stepsSuppose oil production in the Gulf of Mexico was a symmetric horizontal oligopoly in Cournot competition. Assume there are two producers, each with a constant marginal cost of production of $50 per barrel. Let the demand function for oil in the region be D(p) = 12000 – 20p, where demand is measured in barrels per day. (You will need to calculate inverse demand from demand before moving on). What would the perfectly competitive equilibrium price and quantity be? What would be the consumer surplus and producer surplus? Draw each firm’s residual inverse demand curve. Calculate the Cournot-Nash equilibrium price and quantity. What is the total consumer surplus, total producer surplus across the two firms, and deadweight loss?Suppose the inverse demand for a particular good is given by P = 1200-12Q. Furthermore, there are only two firms, A and B. Firm A's marginal cost is a constant $25, and Firm B's marginal cost is a constant $20. Assume these two firms engage in Cournot competition. If we assume that the firm with the lowest costs could supply the entire market, then the deadweight loss due to the market power these two firms exert through Cournot competition equals $. 4 [Round your answer to the nearest two decimals.]
- Two firms operate in a Cournot Duopoly with an inverse market demand function: P = 180 – 3Q, where Q = q1 + q2. Firm 1 has a total cost structure; TC1 = 50 + 2q1 + 2q1 2 and firm 2 had a total cost structure: TC2 = 100 + 3q2 + 3q2 2 . Answer the following questions: a. If both firms wish to compete, what is the optimal quantity for each firm (qi) and the market price? b. What are the profits for each firm from the strategy in part a? c. If both firms choose to collude and not directly compete, what is the new price, quantity, and profits for each firm?Suppose Giocattolo of Italy and American Toy Company of the United States are the only two firms producing toys for sale in the U.S. market. Each firm realizes constant long-term costs so that the average total cost (ATC) equals the marginal cost (MC) at each level of output. Thus, MCo = ATCO is the long-term market supply schedule for toys. Suppose Giocattolo and American Toy Company operate as competitors, and the cost schedules of each company are MCo = ATCO = $10. On the following graph, use the grey point (star symbol) to identify the competitive market equilibrium. Then, use the green triangle (triangle symbols) to identify consumer surplus in this case. Note: Select and drag the point from the palette to the graph. Dashed drop lines will automatically extend to both axes. Then select and drag the shaded region from the palette to the graph. To resize the shaded region, select one of the points and move to the desired position. ? PRICE (Dollars per toy) 20 18 16 14 10 00 6 4 2 0…Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of per ticket. According to the kinked demand curve model, if one firm its price, other firms will do likewise to retain their market share, but if one firm its price, other firms will not follow suit. Therefore, if one of Happyland's competitors decreases its price to below the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why the D₁ portion of the kinked demand curve is relatively D₂ portion. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would elastic than the
- HP and Sony compete primarily by price. Each firm must choose either a high price or a low price simultaneously. Use the following information to create the profit matrix: If HP and Lenovo both set high prices, HP’s profit is $40 million and Sony’s profit is $35 million. If HP sets high price and Sony sets low price, HP’s profit is $25 million and Sony’s profit is $40 million. If HP sets low price and Sony sets high price, HP’s profit is $50 million and Sony’s profit is $10 million. If HP and Sony set low prices, HP has $20 million and Sony has $15 million. Please answer the follow questions: Does Sony have a dominant strategy? HP? If so, which one? If HP and Sony maximize their profits non-cooperatively, what is the Nash-equilibrium for this profit matrix? Instead, if HP and Sony maximize their joint profits cooperatively, what is the equilibrium? Assume they keep their agreements.Two firms compete as Stackelberg duopolists in a market with inverse demand given by 132.00 – 20, where pis the per-unit price, q; is the output for Firm i(either Firm 1 or 2), and Q = q1 + q2. Firm 1 is the leader in this market. Both firms face constant marginal costs of $4 per unit. Assume no fixed costs. What is the optimal output for Firm 1? (Round to two decimals if necessary.) What is the optimal output for Firm 2? (Round to two decimals if necessary.)Assume a duopoly (two firms: A and B) is facing a common demand equation but different cost equations. Q = 300-20P TCA = 300+20Q+2Q2 TCB = 250+10Q+3Q2 Show the profit maximizing quantity (Q) to each firm (A and B) and the corresponding prices (PA and PB). How would the two firms ultimately resolve price competition?
- Consider an industry with only two firms: firm A and firm B. The industry’s inverse demand is P(Q) = 400 − 1/10Q where P is the market price and Q is the total industry output. Each firm has a marginal cost of $10. There are no fixed costs and no barriers to exit the market. Suppose that the two firms engage in Cournot competition. Find the equilibrium price in the industry, the equilibrium outputs, as well as the profits for each firm.Duopoly quantity-setting firms face the market demand p=270 -a. Each firm has a marginal cost of $30 per unit. What is the Cournot equilibrium? The Cournot equilibrium quantities for Firm 1 (q,) and Firm 2 (92) are units and 92 = units. (Enter numeric responses using real numbers rounded to two decimal places.)Consider a Cournot oligopoly with n = 2 firms. Firm 1 cost function is TC₁ (9₁) = 20 + 12q₁ + q², while firm 2 cost function is TC₂ (9₂) = 50 +8q2 + q2 . The total market demand is P(Q) = 50 — 2Q, where Q is the total quantity produced by all (active) firms in the industry. a- Compute the Cournot equilibrium total quantity, price, quantity for each firm, and profit for each firm. Which firm is making higher profits? b- Consider the situation in which a third firm (firm 3) enters the market. What is the total equilibrium quantity, price, quantity and profit for each firm if TC3 = TC₁? [hint: q₁ and q3 will be the same, since 1 and 3 are identical] c- How would your answer at point b change if instead TC3 = TC₂? Would consumers prefer firm 3 to enter with the total cost of firm 1 or firm 2? d- What would be the highest one-time cost that firm 3 would be willing to pay to enter the market and then compete in a Cournot game with total cost equal to firm 1?