(3) Assume that s = 3. (a) Find firm B's profit function under the subsidy. (No work required.) (b) Find firm B's best response function. (You may do this directly or by setting s to zero in your expressions from (1b). (c) Why don't I need to ask you to solve for A's best response?
(3) Assume that s = 3. (a) Find firm B's profit function under the subsidy. (No work required.) (b) Find firm B's best response function. (You may do this directly or by setting s to zero in your expressions from (1b). (c) Why don't I need to ask you to solve for A's best response?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
just q3 A B and C please thank you
![All question are with regards to the following set up. There are two firms A and B. Firms
compete in a Cournot Duopoly in Karhide. They set quantities A and qB. Inverse demand is
P(qA + 9B) = 18 - 9A-9B and costs are C(q) = 3 * q for both firms. Firm B is a domestic firm
(in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engages
in a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm B
produces and sells q units, firm B receives a payment of s *qg from the government.)
You must show your
work at each step, unless the questions is followed by "No work required."](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b2e65f2-c472-45bf-885c-00dffce84016%2F8106c938-0120-4a39-afb5-cb941debff21%2Fwh4yaak_processed.png&w=3840&q=75)
Transcribed Image Text:All question are with regards to the following set up. There are two firms A and B. Firms
compete in a Cournot Duopoly in Karhide. They set quantities A and qB. Inverse demand is
P(qA + 9B) = 18 - 9A-9B and costs are C(q) = 3 * q for both firms. Firm B is a domestic firm
(in Karhide,) and firm A is a foreign firm (from Orgoreyn.) The government of Karhide engages
in a strategic trade intervention by giving firm B a per unit subsidy of s. (That is, when firm B
produces and sells q units, firm B receives a payment of s *qg from the government.)
You must show your
work at each step, unless the questions is followed by "No work required."
![(3)
Assume that s = 3.
(a) Find firm B's profit function under the subsidy. (No work required.)
(b) Find firm B's best response function. (You may do this directly or by setting s to zero in your
expressions from (1b).
(c) Why don't I need to ask you to solve for A's best response?
(d) Solve for the equilibrium outputs (9A, 96).
(e) Solve for the equilibrium price.
(f) Solve for firm B profits.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b2e65f2-c472-45bf-885c-00dffce84016%2F8106c938-0120-4a39-afb5-cb941debff21%2Fjx0rri4_processed.png&w=3840&q=75)
Transcribed Image Text:(3)
Assume that s = 3.
(a) Find firm B's profit function under the subsidy. (No work required.)
(b) Find firm B's best response function. (You may do this directly or by setting s to zero in your
expressions from (1b).
(c) Why don't I need to ask you to solve for A's best response?
(d) Solve for the equilibrium outputs (9A, 96).
(e) Solve for the equilibrium price.
(f) Solve for firm B profits.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education