6. Two firms, Firm 1 and Firm 2 and are engaged in Cournot competition. The inverse demand they arefacing is given by p = 50-q, with p being the price of the good, and q being total quantity demanded,given by q = 91 +92, where 9₁ and 92 are the productions of firm 1 and 2 respectively. The total costof firm 1 is TC1(91) = q and of firm 2 is TC₂ (92) = 292.(a) Find the Cournot equilibrium and the price that corresponds to it.(b) Find the Lerner Index of each firm.

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6. Two firms, Firm 1 and Firm 2 and are engaged in Cournot competition. The inverse demand they are facing is given by p= 50-q, with p being the price of the good, and q being total quantity demanded, given by q = 9₁ +92, where q₁ and q2 are the productions of firm 1 and 2 respectively. The total cost of firm 1 is TC1(91) = q and of firm 2 is TC2 (92) = 292. (a) Find the Cournot equilibrium and the price that corresponds to it. (b) Find the Lerner Index of each firm.

6. Two firms, Firm 1 and Firm 2 and are engaged in Cournot competition. The inverse demand they are facing is given by p= 50-q, with p being the price of the good, and q being total quantity demanded, given by q = 9₁ +92, where q₁ and q2 are the productions of firm 1 and 2 respectively. The total cost of firm 1 is TC1(91) = q and of firm 2 is TC2 (92) = 292. (a) Find the Cournot equilibrium and the price that corresponds to it. (b) Find the Lerner Index of each firm.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

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6. Two firms, Firm 1 and Firm 2 and are competing in quantities. The demand they are facing is given by p=1-91-92, with p being the price of the good, and 9₁ and 92 the quantities produced by firm 1 and 2 respectively. The total cost of firm 1 is TC1 (91) = 9₁ and the one of firm 2 is TC₂ (92) = 292. (a) Find the Cournot equilibrium. (b) The government decides that it wants to make the market more competitive. As such it decides to offer to Firm 1 a license to become the leader in the market. The licence costs F, and if Firm 1 buys it, it will be allowed to choose its quantity before Firm 2. What is the maximum Firm 1 would be willing to pay for this license?
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QUESTION 1A) Two cournot competitors face inverse demand P = 50 - Q. Where, Q = q1+q2, is the total output of firms 1 and 2. What are the equilibrium output levels for q1 and q2, If firm 1 marginal cost is 1, and firm 2's marginal cost is 12? QUESTION 1B. Continuing with the inverse demand, P = 50 - Q, if each firm has a marginal cost of 0, what is the difference between the equilibrium price under Cournot competition and under Bertrand competition? b. C. d. a. 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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Two Cournot competitors face inverse demand p = 50-Q, where Q = 9₁ +92 is the total output of firms 1 and 2. Both firms have marginal cost of 2. What are the equilibrium output levels q₁ and 92? 16 and 16 25 and 25 20 and 9 36 and 3
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