1. Suppose the following: I. Two countries each with demand for homogeneous goods given by P(Q) = 40 - Q In country A there is one firm with marginal cost of production of CA. III. In country B there is one firm with marginal cost of production of CB. Competition in relevant markets is Cournot IV. a) Find for each country expressions for the equilibrium price and equilibrium quantity and firm profits under the assumption that no occurred between the two countries occurred. b) Now assume a state of free trade occurs between the two countries. Derive expressions II.

1. Suppose the following: I. Two countries each with demand for homogeneous goods given by P(Q) = 40 - Q In country A there is one firm with marginal cost of production of CA. III. In country B there is one firm with marginal cost of production of CB. Competition in relevant markets is Cournot IV. a) Find for each country expressions for the equilibrium price and equilibrium quantity and firm profits under the assumption that no occurred between the two countries occurred. b) Now assume a state of free trade occurs between the two countries. Derive expressions II.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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B,C,D
Question 3 Assume we have a market with only two companies in it, Company X and Company Y. Now suppose that both companies have to choose one of two potential strategies for pricing their products: setting a low price or setting a high price. The table below shows the expected profits for each company under each pricing scenario. Assume both companies are in competition with each other and seek to maximize their profits. Under these conditions, how much profit should we expect both companies to earn? Company Y Provide your answer below: High Price Low Price High Price Profit for Company Y: $12, 975,000 Profit for Company X: $12, 975,000 Profit for Company Y: $16, 218,000 Profit for Company X: $1,946, 000 Company X Low Price Profit for Company Y: $1,946, 000 Profit for Company X: $16, 218,000 Profit for Company Y: $6,487,000 Profit for Company X: $6,487,000
5. Suppose there is a Chinese firm that could produce a "widget" at a cost of 9qw, where qw is the number of widgets. It can then ship these widgets to a U.S. firm at a transport cost of $1 per unit and for a price of pw. The U.S. firm can then turn one widget into one car at a cost of $10. Cars are then sold on the world market, where inverse demand for cars is given by: P = 500-2Q. (a) If the Chinese firm is a perfect competitor, what is P = TU.S. = Q = qw= Pw= Chinese = (b) If the Chinese firm is a monopolist, what is P = = TU.S. Pw= qw= TChinese =
Dear tutor, I would be glad if you solve this question with its detailed explanation. Thank you so much!!
*YOU ONLY NEED TO ANSWER QUESTION C*
In India, Cisco’s market share of the Ethernet switch and router market is approximately 67 percent. Juniper and HP each have market shares of about 6.5 percent, and several other firms have somewhat smaller market shares. Draw a diagram showing the equilibrium in this dominant firm market. Identify the equilibrium price and the equilibrium quantity produced by the dominant firm and the competitive fringe firms. Illustrate what happens to the equilibrium price and the equilibrium quantity produced by the dominant firm and the competitive fringe firms if additional fringe firms enter the market
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= Two firms sell substitutable products; the market price is: P = 90-Q, where Q Q₁ + Q₂ is the total market quantity, which consists of Q₁ (the quantity produced by Firm 1) and Q₂ (the quantity produced by Firm 2). The firms choose their quantities simultaneously. Firm 1's costs are C₁ = 10- 6Q₁ +Q². Firm 2's costs are C₂ = Q². Which is the best response function for Firm 2? O O O O Q₂ = 15. 1 Q₂ = 30 - ²0₁₁ 3 Q₂ = 42 + ²³² Q₁₁ 2 = 1. 3 Q₂ = 45. What is the equilibrium market quantity Q? O Q = 15.25. O Q = 30. Q = 46.5. O Q = 50. What is the equilibrium market price P? O P = 90. O P = 60. O P = 43.5. O P = 10.
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DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the quantity of pencilstraded if the firms couldn’t cooperate?
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