Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 - 4Q, and each firm has a constant marginal cost of $12 per unit. Let Q; be the output produced by firm i, where i = 1,2. Then, Firm 1's reaction function is A. Q, = 24 - 0.5Q2. O B. Q, = 24. O C. Q, = 25.5 – 0.5Q2. O D. Q, = 24 - Q2. O E. None of the above. In the Cournot equilibrium for this market, each firm will produce 16 units of output, and the market price will be $ 76. (Enter your responses as integers.) Each firm will earn a profit of $ 1024 . (Enter your response as an integer.) Suppose that instead of competing as a Cournot firm, Firm 1 decides to announce its production decision before Firm 2 chooses its output. Thus, Firm 1 acts as a Stackelberg firm. Use the same market demand, P = 204 – 4Q, and marginal cost, $12, as before. Firm 1 will produce 24 units, Firm 2 will produce 12 units, and the market price will be $ 60 . (Enter your responses rounded to one decimal place.) Firm 1's profit will be $ 1152 , and Firm 2's profit will be $ 576 . (Enter your responses as integers.) After a few years of Cournot and Stackelberg competition, the firms decide to collude and maximize their joint profit. They want to determine the total amount of output they should produce, and then each firm will produce half that amount. The firms should produce a total of units, and the market price will then be $. (Enter your responses as integers.)
Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 - 4Q, and each firm has a constant marginal cost of $12 per unit. Let Q; be the output produced by firm i, where i = 1,2. Then, Firm 1's reaction function is A. Q, = 24 - 0.5Q2. O B. Q, = 24. O C. Q, = 25.5 – 0.5Q2. O D. Q, = 24 - Q2. O E. None of the above. In the Cournot equilibrium for this market, each firm will produce 16 units of output, and the market price will be $ 76. (Enter your responses as integers.) Each firm will earn a profit of $ 1024 . (Enter your response as an integer.) Suppose that instead of competing as a Cournot firm, Firm 1 decides to announce its production decision before Firm 2 chooses its output. Thus, Firm 1 acts as a Stackelberg firm. Use the same market demand, P = 204 – 4Q, and marginal cost, $12, as before. Firm 1 will produce 24 units, Firm 2 will produce 12 units, and the market price will be $ 60 . (Enter your responses rounded to one decimal place.) Firm 1's profit will be $ 1152 , and Firm 2's profit will be $ 576 . (Enter your responses as integers.) After a few years of Cournot and Stackelberg competition, the firms decide to collude and maximize their joint profit. They want to determine the total amount of output they should produce, and then each firm will produce half that amount. The firms should produce a total of units, and the market price will then be $. (Enter your responses as integers.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Two firms produce the same good and compete against each other in a Cournot market. The market demand for their product is P = 204 – 4Q, and each firm has a
constant marginal cost of $12 per unit. Let Q; be the output produced by firm i, where i = 1,2. Then, Firm 1's reaction function is
A. Q, = 24 - 0.5Q2.
B. Q, = 24.
%3D
C. Q, = 25.5 – 0.5Q2.
D. Q, = 24 - Q2.
%3D
E. None of the above.
In the Cournot equilibrium for this market, each firm will produce 16 units of output, and the market price will be $ 76. (Enter your responses as integers.)
Each firm will earn a profit of $ 1024 . (Enter your response as an integer.)
Suppose that instead of competing as a Cournot firm, Firm 1 decides to announce its production decision before Firm 2 chooses its output. Thus, Firm 1 acts as a
Stackelberg firm. Use the same market demand, P = 204 - 4Q, and marginal cost, $12, as before.
Firm 1 will produce 24 units, Firm 2 will produce 12 units, and the market price will be $ 60 . (Enter your responses rounded to one decimal place.)
Firm 1's profit will be $ 1152 , and Firm 2's profit will be $ 576 . (Enter your responses as integers.)
After a few years of Cournot and Stackelberg competition, the firms decide to collude and maximize their joint profit. They want to determine the total amount of output
they should produce, and then each firm will produce half that amount.
The firms should produce a total of
units, and the market price will then be $
(Enter your responses as integers.)
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