6. Two firms, Firm 1 and Firm 2 and are engaged in Cournot competition. The inverse demand they are facing is given by p= 50-q, with p being the price of the good, and q being total quantity demanded, given by q = 9₁ +92, where q₁ and q2 are the productions of firm 1 and 2 respectively. The total cost of firm 1 is TC1(91) = q and of firm 2 is TC2 (92) = 292. (a) Find the Cournot equilibrium and the price that corresponds to it. (b) Find the Lerner Index of each firm.
Q: Use the information from the previous table to fill in the following table. Hint: You will need to…
A: The quantity of all goods and services produced is multiplied by their prices, and the resulting sum…
Q: As an operations management consultant, you have been asked to evaluate a furniture manufacturers…
A: Given information: Sales = $23.5 million Cost of goods sold = $20.8 million Accounts receivable =…
Q: 2. Use the following table to determine the absolute advantage and comparative advantage of China…
A: Absolute advantage represent the ability of an individual or country to produce a greater quantity…
Q: Choose the correct statement: Select one: a.There is a negative relationship between the price level…
A: The measure that depicts quantities of services and goods being demanded at various price levels is…
Q: Please identify each of the following the statements as true/false/uncertain and support your claim…
A: Nominal interest rate It is that rate in which is the real interest rate and inflation. Thus…
Q: DRAW A GRAPH. WITHOUT GRAPH THUMBS DOWN! Suppose the markup of goods prices over marginal cost is 2%…
A: The markup of goods prices over marginal cost: m = 2% or .02 The wage-setting equation: W=P(1-u)…
Q: Q6. Suppose you work as a tutor in your school, making $16 per hour. Yesterday, you decided to…
A: Opportunity cost is frequently referred to as the next best alternative. The loss of gain that…
Q: The demand function of a product is q = 75-p².2 ≤p≤7, where g is the quantity of the product that…
A:
Q: In a perfectly competitive market, the efficient quantity of a good will be produced when the good…
A: In perfectly competitive market, there are large number of firms selling identical goods.
Q: A. a change in technology. B. a change in the number of firms selling the good. C. a change in the…
A: In economics, we define the quantity supplied of a good or service as the amount of that good that…
Q: What is the laffer curve?
A: Introduction Laffer curve has given by an eminent supply side economist Arthur Laffer. He has argued…
Q: Q.3.3 Explain the steps of the motivation process and how it applied to John.
A: Motivation: It is a process where people behave in a way that helps the business to achieve its…
Q: Answer the next four questions after completing the cost table below: Quantity TC MC AFC AVC ATC 0 1…
A: The measure that depicts expenses incurred by business for carrying out day to day expenses is known…
Q: Bad weather damages the production of avocadoes in Ventura County. The effect on the marketplace for…
A: Demand curve slopes downward and it shows an inverse relationship between price and quantity…
Q: Suppose that demand for cruise ship vacations is given by P =1200 − 5Q, where Q is the total number…
A: Given information: Demand function, P = 1200 - 5Q Marginal cost = $300 Number of sellers = 3
Q: 2. () Budget line 1: Wages are $12 per hour. No income tax. Draw budget line 1. (ii) Budget line 2:…
A: Utility maximizing condition is MUr / w = MUcWhere MUr = Marginal utility from leisure,w = Wage…
Q: owing market is a duopoly populated only by the companies Alpha and Beta. They produce and sell…
A: Duopoly is a special form of the oligopoly market where only two firms exist in the market. The…
Q: Are carbon prices working? Economists say that raising the cost of burning coal, oil, and gas is a…
A: The cost of missed opportunities is the benefit that might have been obtained from an alternative…
Q: 6. An important routine function of the Federal Reserve Bank is to: A. supervise the liquidation of…
A: The American central bank is known as the Federal Reserve System (FRS). It is conceivably the most…
Q: An increase in the general price level means goods will now cost more. What effect with this have on…
A: Inflation refers to increase in average price level of goods and services produced in the economy.
Q: Look at the attached table. A. What are the Nash equilibrium to this game (if there are any)? B.…
A: Nash Equilibrium A player can achieve the desired outcome by continuing to their initial strategy,…
Q: Q = 6L - 0.1L² + 4 K - 0.2 K² The wage rate is $30, the cost of capital is $40, and output sells for…
A: Given information: Q = 6L - 0.1L2 + 4K - 0.2K2 Wage rate (w) = $30 Capital cost (r) = $40 Price of…
Q: The price of corn is held above equilibrium. Use the Full Hill method steps to show what happens to…
A:
Q: Name Three public policies and how do they contribute to economic growth?
A: Increased output of products and services is referred to as economic growth.Economic growth can be…
Q: t the maintenance for a piece of equipment costs $300 EOY1 and increases by 15% every year for 5…
A: Given informations: First maintenance cost = $300 Given the value of, g = 15% Interest rate, i = 9%
Q: n a particular industry, labor supply is ES = 10 + w and labor demand is ED = 40 - 4w, where E is…
A: Given the supply function of labour, Es = 10 + w The demand function of labour, Ed = 40 - 4w
Q: 15. Total expenditures in a country (in billions of dollars) are increasing at a rate of f(x) =…
A: Given "Total expenditure (in billions of $) is increasing by the rate" f(x) = 8.22x+87.13…
Q: eed answer quickly..
A: sold per day price per meal($) total fixed cost($) total variable cost($) total revenue($) 0 3.50…
Q: QUESTION 13 ote: No referencing is required for short answer questions. e following market is a…
A: Nash equilibrium refers to the strategy which provide the best outcomes provided the strategy of…
Q: uestion 13 The table below presents the demand schedule and marginal costs facing a monopolist…
A: Quantity Price ($) Total Revenue ($) P×T Marginal Revenue ($) Trn-Trn-1 Marginal cost($) 0 12 0…
Q: In 2019, X Company sold 5,250 units of its only product. Total revenue was $1,345,575, total…
A: Total Revenue is the total amount earned by the seller after selling the goods and services or we…
Q: Which of the following statements is not true? Multiple Choice Public goods are only provided by…
A: In terms of the economy, governments are responsible for establishing economic laws, often known as…
Q: At its meeting ending on 2 February 2022, The Bank of England (BOE) Monetary Policy Committee (MPC)…
A: Monetary policy Monetary policy refers to the policy of the central bank of the nation, by which…
Q: Some have argued that higher cigarette prices do not deter smoking. While there are many arguments…
A: In the market, demand refers to the amount of goods and services that are required by households,…
Q: Let's assume that in a South American country, the nominal GDP went down by 1%, while, the price…
A: GDP is the value of final goods and services produced in the economy in an economic year.
Q: We expect the marginal cost to increase as this firm produces more computers. But when the firm…
A: The rise or fall in the cost of producing/providing one more product is referred to as marginal…
Q: Choose the correct statement: Select one: a.There is a negative relationship between the price level…
A: The measure that depicts quantities of goods and services demanded at various levels of price is…
Q: Automatic stabilizers (a) Are government policies or programs that stabilize the economy…
A: Fiscal policy refers to policy of expenditure and taxes of government. Government makes changes in…
Q: tuey the VP for advertising at the Meg-low Mart is trying to sell Meg-Low Mart Body Spray for $1.99…
A: Following is the given information: Given the selling price of Spray = $1.99 per unit Variable cost…
Q: Self-Service Technologies (SSTs) have led to a reduction of and in some instances a complete…
A: The study concentrates on reliable and applicable ways to manage SST which means self service…
Q: Kwame is the purchasing manager for an electronics firm in North Carolina. He purchases a large…
A: Direct import is a situation where a firm buys some product from a company which exists in another…
Q: For an econmomy with a MPC of .80 the multiplier will be 5 4 a magnitue of 1 less…
A: MPC is the marginal propensity to consume which is the proportion of income spent on consumption.
Q: A startup is considering buying a $295,000 piece of equipment. If it purchases the equipment, it…
A: Given information Initial investment= $295000---- by taking a loan Interest rate for repayment of…
Q: Macaroni and cheese are complements, when the price of macaroni goes up, the demand curve for…
A: Two goods are complements when they are consumed together.
Q: 12
A: Economic growth refers to the increase in the real value of total output generated by an economy…
Q: Question 7 State five criticisms of a monopoly.
A: A monopoly is such a market structure in which there is only one seller and many buyers.
Q: Customer retention
A: Customer retention is the ability of a business or product to keep its customers for a predetermined…
Q: EasyTax markets both a deluxe and a standard version of its software. The deluxe version contains…
A: A consumer will buy the product only when the price is equal to or less than the willingness to pay.…
Q: Ike's Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only…
A: Given information: Ike Bikes is a manufacturer of bikes, currently producing bikes in its only one…
Q: A consumer is in equilibrium at point A in the accompanying figure. The price of good X is $5. What…
A: The measure that depicts intersection of demand curve and supply curve in the economy is known as…
Step by step
Solved in 7 steps with 7 images
- 6. Two firms, Firm 1 and Firm 2 and are competing in quantities. The demand they are facing is given by p=1-91-92, with p being the price of the good, and 9₁ and 92 the quantities produced by firm 1 and 2 respectively. The total cost of firm 1 is TC1 (91) = 9₁ and the one of firm 2 is TC₂ (92) = 292. (a) Find the Cournot equilibrium. (b) The government decides that it wants to make the market more competitive. As such it decides to offer to Firm 1 a license to become the leader in the market. The licence costs F, and if Firm 1 buys it, it will be allowed to choose its quantity before Firm 2. What is the maximum Firm 1 would be willing to pay for this license?1. The market (inverse) demand function for a homogeneous good is P(Q) = 10 - Q. There are two firms: firm 1 has a constant marginal cost of 2 for producing each unit of the good, and firm 2 has a constant marginal cost of 1. The two firms compete by setting their quantities of production, and the price of the good is determined by the market demand function given the total quantity. a. Calculate the Nash equilibrium in this game and the corresponding market price when firms simultaneously choose quantities. b. Now suppose firml moves earlier than firm 2 and firm 2 observes firm 1 quantity choice before choosing its quantity find optimal choices of firm 1 and firm 2.QUESTION 1A) Two cournot competitors face inverse demand P = 50 - Q. Where, Q = q1+q2, is the total output of firms 1 and 2. What are the equilibrium output levels for q1 and q2, If firm 1 marginal cost is 1, and firm 2's marginal cost is 12? QUESTION 1B. Continuing with the inverse demand, P = 50 - Q, if each firm has a marginal cost of 0, what is the difference between the equilibrium price under Cournot competition and under Bertrand competition? b. C. d. a. The Cournot price is higher than the Bertrand price by 50. The Cournot price is lower than the Bertrand price by 25. The Cournot price is higher than the Bertrand price by 50/3. Equilibrium prices under Cournot and Bertrand are the same, so the difference is zero.
- 2. A homogenous good industry consists of two firms (firm 1 and firm 2). Their cost functions are cq and cq2, respectively, where c<2. The market demand function is p=10-Q, where Q=q₁+q₂. (a) Assume that the two firms play the Bertrand price game. Find the firms' choices in the Bertrand-Nash equilibrium. (b) Assume that the two firms play the Cournot quantity game. Find the firms' choices in the Cournot-Nash equilibrium. (c) Assume the two firms play the Stackelberg game with firm 1 as the leader. Find the firms' equilibrium choices in the Stackelberg equilibrium.. The market for widgets consists of two firms that produce identical products. Competition in the market is such that each of the firms independently produces a quantity of output, and these quantities are then sold in the market at a price that is determined by the total amount produced by the two firms. Firm 2 is known to have a cost advantage over firm 1. A recent study found that the (inverse) market demand curve faced by the two firms is P = 280 – 2(Q1 + Q2), and costs are C1(Q1) = 3Q1 and C2(Q2) = 2Q2. a. Determine the marginal revenue for each firm. b. Determine the reaction function for each firm.2.- Each of two firms, firms 1 and 2, has a cost function C(q) = 1 2 q; the demand function for the firms' output is Q = 1.5-p, where Q is the total output. Firms compete in prices. That is, firms choose simultaneously what price they charge. Consumers will buy from the firm offering the lowest price. In case of tying, firms split equally the demand at the (common) price. The firm that charges the higher price sells nothing. (Bertrand model.) (a) Formally argue that there could be no equilibrium in prices other than p1 = p2 = 1 2. (b) Solve the same problem, but this time assuming that firms compete in quantities.Now, suppose that firm 1 has a capacity constraint of 1/3. That is, no matter what demand it gets, it can serve at most 1/3 units. Suppose that these units are served to the consumers who are willing to pay the most. Thus, even if it sets a price above that of firm 1, firm 2 may be able to sell some output. (c) Obtain the (residual) demand of firm 2 (as a function of its own…
- Two Cournot competitors face inverse demand p = 50-Q, where Q = 9₁ +92 is the total output of firms 1 and 2. Both firms have marginal cost of 2. What are the equilibrium output levels q₁ and 92? 16 and 16 25 and 25 20 and 9 36 and 31. Consider a market with three firms (i = 1, 2, 3), which have identical marginal costs C = c2 = C3 = 0. The inverse demand function is given by p =1- Q, where Q = 91 + 92 + 93. a. Compute the Cournot equilibrium, i.e., the market price and quantity. b. Assume that two of the three firms merge. Show that the profit of merging firms decreases. c. What happens to the market price if all three firms merge compared to part (a)?a) Suppose that the two firms engage in Cournot competition. Find the equilibrium price PNE in the industry, the equilibrium outputs QANE and QBNE, as well as the profits πANE and πBNE, for each firm. b) Suppose the marginal cost for firm B increases from $20 to $140, while everything else remains unchanged. Find the new equilibrium price PNE in the industry, the new equilibrium outputs QANE and QBNE, as well as the new profits πANE and πBNE for each firm. c) Suppose that, in addition to the marginal cost increase from $20 to $140 from sub question b), firm B also has a fixed cost of $2500, out of which $2100 may be recouped if it shuts down; everything else remains unchanged. In this case, what will firm B’s optimal output be? (Justify your answer.) What will firm A’s profit be?
- 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?21. In the industry, only two firms (Firm 1 and Firm 2) operate and they produce a homogenous good. They collude: they maximize their joint profit and split it equally between them. Firm I has the total cost of producing q; units of output given by the function TC(q)-8q1. The total cost of producing q: units of output for Firm 2 is TC(q)-q. Only integer quantities are allowed (no fractions). The market demand for the good is Q(P)-72-P, where Q is the quantity demanded and P is the unit price of the good. How many units of the good do cach firm produce in the equilibrium? A. Each firm produces 14 units. B. Firm I produces 32 units, and Firm 2 produces 2 units. C. Firm 1 produces 28 units, and Firm 2 produces 4 units. D. Each firm produces 16 units. E. None of the aboveHelp me please