4. Consider a market with two horizontally differentiated firms, X and Y. Each has aconstant marginal cost of $20. Demand functions are:—D 100- 2Рх + 1PуQxQy = 100 - 2Py + 1PxCalculate the Bertrand equilibrium in prices in the market. Also, calculate the quantitysold and the profit of each firm.

Bertrand equilibrium occurs at Px = Py = MC Hence, Bertrand equilibrium in prices in the market is…

Answered: 4. Consider a market with two…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A computer hardware firm sells both laptop computers and printers. Through the magic of focus groups, their pricing team determines that they have an equal number of three types of customers, and that these customers' reservation prices are as illustrated in the figure below. Customer A Customer B Customer C and a price for printers of Laptop $750 $950 $650 Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of P= 650 P= 100 Printer $100 $50 $150 Bundle $850 $1,000 $800 (Enter your responses as whole numbers.) In turn, profit is = $ 2150 (Enter your response as a whole number.) After conducting a costly study,…
The following graph illustrates the market for small moving trucks in Eugene, OR, during Oregon's fall move-in week. PRICE (Dollars per small truck) 100 Demand 90 Supply 80 70 28 80 50 40 30 20 10 0 0 1 2 3 4 5 8 9 10 QUANTITY (Hundreds of small trucks) Suppose that Zoomba is one of over a dozen competitive firms in the Eugene area that offers moving truck rentals. Based on the preceding graph showing the weekly market demand and supply curves, the price Zoomba must take as given is Fill in the price and the total, marginal, and average revenue Zoomba eams when it rents 0, 1, 2, or 3 trucks during move-in week. Quantity (Trucks) Price Total Revenue (Dollars per truck) (Dollars) 0 1 2 3 Marginal Revenue (Dollars) Average Revenue (Dollars per truck) 0 The demand curve faced by Zoomba is identical to which of its other curves? Check all that apply. Supply curve Average revenue curve Marginal cost curve Marginal revenue curve
Suppose that firm Alphabet is the only company that sells all-inclusive vacation packages in the UK. It faces two markets with demand curves given by P₁ = 200 - Q₁ and P₂ = 100-Q2. Assume that Alphabet's total cost function is C = 400 + 200 1) What is the market structure of the all-inclusive vacation packages in the UK? Is firm Alphabet a price taker or price maker? Explain. 2) If Alphabet can price discriminate and could tell which consumer belongs to which market before the purchase happens, what is the type of price discrimination that Alphabet is practising? Explain. Give another example of the same type of price discrimination. 3) If Alphabet can charge different prices at those two markets, what price should it charge in each market in order to maximise profits? What are the quantities it should produce in each market? 4) What if he cannot price discriminate? Then what price should he charge? What is the quantity produced?
Q2: Firms A and B are two firms supplying products in two separate differentiated goods markets. Equations (1) and (2) give the total cost functions of the two firms: - Firm A: TC - 2Q -(1) - Firm B TC - 10 + 2Q - -(2) Each firm has the ability to produce a maximum quantity of 80,000 units in ten bateches of 8,000. Use the information given about firms A and B and appropriate diagrams/figures to explain how the equilibrium for both firms will change if a rival company increases its prices.
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
Continuing with inverse demand p = 50 - Q, if each firm has marginal cost of 0, what is the difference between the equilibrium price under Cournot competition and under Bertrand competition? 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.
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please explain in steps
9. Two firms compete by choosing price. Their demand functions are q1 = 20 – pı + P2 and q2 = 20 – P2 + P1. Marginal costs are zero a) Suppose the two firms set their prices at the same time. Find the resulting NE. What 2 price will each firm charge, how much will it sell, and what will its profit be? b) Suppose Firm 1 sets its price first and then Firm 2 sets its price. What price will each firm charge, how much will it sell, and what will its profit be? c) Suppose there are three ways this game can be played: both firms set price at the same time; firm 1 sets its price first; firm 2 sets its price first. If firm 1 can choose among these options, which would it prefer?
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