with a Demand function p = 169 - 2Q. All three firms have identical Cost functions: TC = 1200 - 95q + 2q2. i) Given that the firms are able to collude, what is the equilibrium market price and output? ii) If all of the firms cheat and each increases output by two units, what would be the new
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Q. Three firms operate in a market with a Demand function p = 169 - 2Q. All three firms have identical Cost functions: TC = 1200 - 95q + 2q2.
i) Given that the firms are able to collude, what is the equilibrium market price and output?
ii) If all of the firms cheat and each increases output by two units, what would be the new
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- Gamma and Zeta are the only two widget manufacturers in the world. Each firm has a cost function given by: C(q) = 10+20q + q^2, where q is number of widgets produced. The market demand for widgets is represented by the inverse demand equation: P = 200 - 2Q where Q = q1 + q2 is total output. Suppose that each firm maximizes its profits taking its rival's output as given (i.e. the firms behave as Cournot oligopolists). a) What will be the equilibrium quantity selected by each firm? What is the market price? What is the profit level for each firm? Equilibrium quantity for each firm__ price__ profit__ b) It occurs to the managers of Gamma and Zeta that they could do a lot better by colluding. If the two firms were to collude in a symmetric equilibrium, what would be the profit-maximizing choice of output for each firm? What is the industry price? What is the profit for each firm in this case? Equilibrium quantity for each firm__ price__ profit__ c) What minimum discount factor is required…Consider the following market demand function: Q= 20-2P, where P is the market price. Suppose there are two firms- A,B in the market and they have the same cost function: the per unit cost of producing output is 4. The firms compete by choosing quantities. Find the reaction functions for both the firms if they are maximizing profits. What is the profit maximizing output for each firm and corresponding market price? If there was only one firm in the market how would your answer change?A) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 90 – 3Q. The marginal cost for each firm is €18. Calculate the level of output that each firm would produce at the Cournot equilibrium. B) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 60 – Q. The marginal cost for each firm is €36. What price should Firm 1 charge at the Cournot equilibrium? C) Consider the production function Q = 10KL. Will the MRTS for this production function remain constant along the Q = 200 isoquant? Explain briefly.
- Alpha and Gamma are the only two phone handset manufacturers in the world. Each firm has a cost function given by: C(q) = cq + q?, where q is number of phones produced and c=70. The market demand for phones is represented by the inverse demand equation: P = a - bQ where Q = q1 + q2 is total output, a=250 and b=1. Suppose that each firm maximizes its profits taking its rival's output as given (i.e. the firms behave as Cournot oligopolists). a) What will be the equilibrium quantity selected by each firm? What is the market price? What is the profit level for each firm? Equilibrium quantity for each firm , price , profit b) It occurs to the managers of Alpha and Gamma that they could do a lot better by colluding. If the two firms were to collude, what would be the profit-maximizing choice of output for each firm? What is the industry price? What is the profit for each firm in this case? Equilibrium quantity for each firm , price , profit c) What minimum discount factor is required for…Suppose the inverse demand for a product produced by a single firm is given by: P = 64 – 4(Q) and this firm has a marginal cost of production of: MC = 8 1. If the firm cannot price-discriminate, what is the profit-maximizing price Number and level of output? Number 2. If the firm cannot price-discriminate, what is : -the consumer surplus Number , -the producer surplus Number -the dead-weight loss Number 3. If the firm can practice perfect price discrmination, what output level will it choose? Number -the consumer surplus Number -the producer surplus Number -the dead-weight loss Number. No hand written solution and no imageHere 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
- Q3. There are two firms selling differentiated products. Firm A faces the following demand for his product: e, = 20 – -P, + -P, 2. Firm B faces the following demand: 1 P. +-P, 2. 0, = 220- Assume that the marginal cost is zero both for firm A and firm B. What are the equilibrium prices of a simultaneous price competition? What would the equilibrium prices be if A is the leader and B is the follower?Suppose two profit-maximising firms, Firm 1 and Firm 2, produce an identical good. The market demand curve is P = 340 - 40 where Q = q1 + q2. The firms face costs TCi = 20gi for i = 1, 2. a) If both firms are price- setters, find the demand curve for each firm. What are the equilibrium quantity, price and profit for each firm?Consider an electricity market where there are three suppliers, each with constant marginal cost (a reasonable approximation in electricity generation). Firm 1 has a capacity of 200 at MC = 5. Firm 2 has a capacity of 100 at MC = 8. Firm 3 has a capacity of 100 at MC = 10. a. If the three firms are price takers (i.e., behave competitively), what is the industry supply curve? b. Compute the equilibrium price and quantity when the market demand is Q(P) = 1000/p0.s. %3D c. Compute the equilibrium price and quantity when the market demand is Q(P) = 750/p0.5. %3D d. Compute the equilibrium price and quantity when the market demand is Q(P) = 500/P0.5.
- 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?Suppose a market is served by two firms (a duopoly). The market demand function given by P = 1200 - Q_{1} - Q_{2} where Q_{1} is the output produced by firm and Q_{2} is the output produced by firm 2 . Firm cost of production is given by the function C(Q_{t}) = 120Q_{t} and firm 2's cost of production is given by the function C(Q_{2}) = 120Q_{2} The average cost of firm 1 is given by A*C_{1} = 120 and the average cost of firm 2 is given by A*C_{2} = 120 Marginal profit function for firm 1: Delta pi 1 Delta Q 1 equiv1080-2Q 1 -Q 2; (d*pi_{2})/(Delta*Q_{2}) = 1080 - Q_{1} - 2Q_{2} Marginal profit function for firm 2: What will be the equilibrium profit levels earned by the Stackelberg leader firm and the Stackelberg follower firm?There are two firms selling differentiated products. Firm A faces the following demand for his product: QA=20-1/2PA+1/4PB Firm B faces the following demand: QB=220-1/2PB+1/4PA PA represents the price set by firm A. PB represents the price set by firm B.Assume that the marginal cost is zero both for firm A and firm B.What are the equilibrium prices of a simultaneous price competition?What would the equilibrium prices be if A is the leader and B is the follower?