4. In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, = 30qı, the cost function of firm 2 is: C2 = 30q2, the market demand function is: P = 90 – Q, here Q= q1 +q2. a. Given any q1, what is firm 2's best response/rection function? b. Given any q2, what is firm 1's best response/rection function? c. If the two firms decide to set their quantities simultaneously (Cournot model), what are the Cournot equilibrium quantities and the market price? d. If firm 1 makes its production decision first, firm 2 produces based on firm l's decision (Stackelberg model), what are the equilibrium quantities and the market price? In a Bertrand model, the two firms set their price simultaneously, assume both firms do not have production capacity limits, and there is no collusion. What are the equilibrium market quantity and market price? f. If the two firms decide to form a Cartel, i.e. they want to maximize the profit of the whole industry, and then split the production and profit evenly. What is the equilibrium price and each firm's production? е.

4. In a duopoly market, two firms produce the identical products, the cost function of firm 1 is: C, = 30qı, the cost function of firm 2 is: C2 = 30q2, the market demand function is: P = 90 – Q, here Q= q1 +q2. a. Given any q1, what is firm 2's best response/rection function? b. Given any q2, what is firm 1's best response/rection function? c. If the two firms decide to set their quantities simultaneously (Cournot model), what are the Cournot equilibrium quantities and the market price? d. If firm 1 makes its production decision first, firm 2 produces based on firm l's decision (Stackelberg model), what are the equilibrium quantities and the market price? In a Bertrand model, the two firms set their price simultaneously, assume both firms do not have production capacity limits, and there is no collusion. What are the equilibrium market quantity and market price? f. If the two firms decide to form a Cartel, i.e. they want to maximize the profit of the whole industry, and then split the production and profit evenly. What is the equilibrium price and each firm's production? е.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter15: Imperfect Competition

Section: Chapter Questions

Problem 15.3P

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The inverse market demand curve for salmon is given by P(Y) = 100 – 2Y, and the total cost function for any firm in the industry is given by TC(y) = 4y. a. Suppose that two Cournot firms operated in the market. What would be the reaction function for Firm 1 and the reaction function of Firm 2? (Notes: The marginal cost is not zero). If the firms were operating at the Cournot equilibrium point, what would the industry output and price be? b. For the Cournot case, draw the two reaction curves and indicate the equilibrium point on the graph
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Answer to first part is 15, need 16 done
Suppose a market is served by two firms (a duopoly) The market demand function given by P = 1200 - O_{1} - O_{2} where is the output produced by firm 1 and is the output produced by firm 2 Q_{1}*Q_{2} Firm I's cost of production is given by the function C(Q_{1}) = 120Q_{1} and firm 2's cost of production is given by the function C(Q_{2}) = 120Q_{2} The average cost of firm is given by A*C_{1} = 120 and the average cost of firm 2 is given by A*C_{2} = 120 Marginal profit function for firm 1 (d*pi_{1})/(Delta*Q_{1}) = 1080 - 2Q_{1} - Q_{2} Marginal profit function for firm 2 (Delta*pi_{2})/(Delta*Q_{2}) = 1080 - Q_{1} - 2Q_{2} What will be the equilibrium profit levels earned by the stackelberg leader firm and the stackelberg follower firm?
Here is a market with three firms: 1, 2, and 3. The demand curve is P=100-Q. There is no fixed cost but the marginal cost 10 for all firms. Firm 1 is a leader firm so that it decides the quantity Q1 first. Then two firms respectively decide their quantities Q2 and Q3 simultaneously. 1) At an equilibrium (SPE), Q1 is Q2=Q3= 2) At the equilibrium, (the market quantity) Q= and (the market price) P= 3) The profit of firm 1 is while the profit of firm 2 and 3 respectively is
I need answers of A, B, C
2
Suppose a market is served by two firms (a duopoly). The market demand function given by P = 1200 - Q_{1} - Q_{2} where Q_{1} is the output produced by firm and Q_{2} is the output produced by firm 2 . Firm cost of production is given by the function C(Q_{t}) = 120Q_{t} and firm 2's cost of production is given by the function C(Q_{2}) = 120Q_{2} The average cost of firm 1 is given by A*C_{1} = 120 and the average cost of firm 2 is given by A*C_{2} = 120 Marginal profit function for firm 1: Delta pi 1 Delta Q 1 equiv1080-2Q 1 -Q 2; (d*pi_{2})/(Delta*Q_{2}) = 1080 - Q_{1} - 2Q_{2} Marginal profit function for firm 2: What will be the equilibrium profit levels earned by the Stackelberg leader firm and the Stackelberg follower firm?
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