24.Competition à la Cournot with homogenous goods and symmetric convex costfunctions. Consider an industry with N > 2 firms competing à la Cournot, facing inverse demand functionp(Q) = a – bQ, where Q = E1 9i and symmetric cost function c(q;) = cq; + q where a > c, d > 0, b > 1and d+ 26 > 0. (You may also assume that < - to avoid settings with negative costs). As a remark,note that marginal costs in this setting are c(qi) = c+ dq; , which is increasing in firm i's output.26+d d.Find the equilibrium price and profits for each firm at equilibrium. What happens to thesewhen the number of firms increase? Explain.According to your results determine whether the following statement is true or false. "Moreе.firms in an industry à la Cournot decrease profits for all firms in the industry while decreasing the price inthe market". Justify your answer.

Given information Cournot model with 2 firms Inverse demand function P=a-bQ Q=q1+q2 identical cost…

24. Competition à la Cournot with homogenous goods and symmetric convex cost functions. Consider an industry with N > 2 firms competing à la Cournot, facing inverse demand function p(Q) = a – bQ, where Q = 1q; and symmetric cost function c(qi) = cq; + q? where a > c, d > 0, 6 > 1 and d+ 2b > 0. (You may also assume that note that marginal costs in this setting are c(qi) = c+ dq; , which is increasing in firm i's output. < - to avoid settings with negative costs). As a remark, a-c 26+d %3|

24. Competition à la Cournot with homogenous goods and symmetric convex cost functions. Consider an industry with N > 2 firms competing à la Cournot, facing inverse demand function p(Q) = a – bQ, where Q = 1q; and symmetric cost function c(qi) = cq; + q? where a > c, d > 0, 6 > 1 and d+ 2b > 0. (You may also assume that note that marginal costs in this setting are c(qi) = c+ dq; , which is increasing in firm i's output. < - to avoid settings with negative costs). As a remark, a-c 26+d %3|

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

1
None
3. Suppose there are two firms competing in a market. Both firms have the cost function c(x) =10x/2 while the demand function is given by x(p) = 100 – 0.1p. c. Suppose firm 1 decides its quantity first and firm 2 follows after observing x1. Find the profit maximizing quantity and price for this Stackelberg competition
Assume there are two firms, firm A and B, engaged in Cournot competition. The industry demand curve is given by P = 220 - Q, where Q = QA + QB denotes industry output. Each firm faces a marginal cost of production equal to $16. In equilibrium, what will be the output level of firm A?
Suppose that the market consists of 6 identical firms , that the market demand curve is P=200-2Q and that each firm's marginal cost is 32. The cournot equilibrium quantity per firm is q=_____________________ and the equilibrium quantity in the market is Q=______________________. The market price is P=$______________ per unit.
8. Suppose there are two identical firms in an industry who compete by setting quantities. The output of firm 1 is denoted by q1 and that of firm 2 is denoted by q2. Each firm faces a constant marginal cost of 3. Let Q denote total output, 1.e. Qq1 +42. The inverse demand curve in the market is given by P-15-Q (d) Suppose firms interact repeatedly over an infinite horizon, and firms have a common discount factor & € (0,1). Specify a trigger strategy for each firm to sustain the collusive arrangement as an equilibrium outcome. Cal- culate the minimum value of & for which such a trigger strategy collusion as an equilibrium in the repeated interaction. ain
Two firms are engaged in Cournot (simultaneous quantity) competition. Market-level inverse demand is given by P = 160 − 4Q Firm 1 has constant marginal costs of MC1 = 8, while Firm 2 has constant marginal costs of MC2 = 24. 1) Does there exist a low enough positive marginal cost for firm 1 such that firm 1 acts like a monopoly in this market, if so what is the MC if not why?
(Preferably answered digitally as I have a hard time understanding paper hand writing.)
Suppose there are two pharma companies (A and B) vying to develop the first vaccine to cure AIDS. Assume a fixed MC across the two firms MCA = MCB = 4. Assume further that they both face a market demand of P = 12 -0.00004Q and Q=QA +QB. Assume firm B's reaction function is: QB = 125,000 - 0.5QA. Compute for: Firm A's Revenue or RA Firm A's Marginal revenue MR Output for firm A or QA and output for firm B or QB Market Q* and P*
3
Use the orange points (square symbol) to plot the initial short-run industry supply curve when there are 10 firms in the market. (Hint: You can disregard the portion of the supply curve that corresponds to prices where there is no output since this is the industry supply curve.) Next, use the purple points (diamond symbol) to plot the short-run industry supply curve when there are 15 firms. Finally, use the green points (triangle symbol) to plot the short-run industry supply curve when there are 20 firms. PRICE (Dollars per pound) 100 90 80 70 80 50 40 30 20 10 0 0 125 250 375 500 825 750 875 1000 1125 1250 QUANTITY (Thousands of pounds) Demand Because you know that competitive firms earn Supply (10 firms) True Supply (15 firms) If there were 10 firms in this market, the short-run equilibrium price of rhodium would be $ would . Therefore, in the long run, firms would False Supply (20 firms) per pound. From the graph, you can see that this means there will be ? per pound. At that price,…
Suppose the iceberg lettuce industry is a Cournot duopoly with two firms: Xtra Leafy (a) and Yummy Farms (y). Xtra Leafy produces q units of output and Yummy Farms produces qy units of output. Aggregate market output is Q = x + y. The (inverse) market demand schedule is: p = 176 - 2Q Both firms have identical cost structures: MC = MC₁ = ATC₂ = ATC₁ = $12 Find Xtra Leafy's Cournot reaction function of the form: 9x = a + bay Where "a" is the reaction function's intercept and "b" is its slope. Note: Please review the formatting instructions above. If any value is negative, be sure to include its negative sign. a. a= b. b = Hint: One of your answers will be negative. Think about why.