7. Jie is a firm manager deciding its sales quantity strategy. His firm is in a market with another competitor, and he is the leader in the sequential game. Collusion is impossible. The market inverse demand function is P = 16 – Q, where Q is the total quantity of q? the production. The cost functions of Jie's firm and the other firm are c(q) = and c(q) = q?, respectively. So Jie should set the quantity as

7. Jie is a firm manager deciding its sales quantity strategy. His firm is in a market with another competitor, and he is the leader in the sequential game. Collusion is impossible. The market inverse demand function is P = 16 – Q, where Q is the total quantity of q? the production. The cost functions of Jie's firm and the other firm are c(q) = and c(q) = q?, respectively. So Jie should set the quantity as

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

Question 3:Suppose the inverse demand for a good is given by P = 50 – 4Q, where Q is the totalquantity supplied by all firms in the market. Suppose each firm in the market has a constantmarginal cost of 18.Q3 a) Assume the market consists of two firms that set their quantities simultaneously.Calculate the duopoly levels of production and the equilibrium price. Q3 b) Now assume firm 1 chooses its production level before firm 2 does. What will be theequilibrium quantities, price and profits in this case?Q3 c) Now instead suppose that the two firms compete over prices rather than quantities.What will be the equilibrium price and profits of firms 1 and 2 in this case? Finally, if firm 1manages to lower its marginal cost to 14, what will be the new equilibrium price, quantitiesand profits?
Can you show me the answer of question c and d? Thank you so much for your help
Suppose Giocattolo of Italy and American Toy Company of the United States are the only two firms producing toys for sale in the U.S. market. Each firm realizes constant long-term costs so that the average total cost (ATC) equals the marginal cost (MC) at each level of output. Thus, MCo = ATCO is the long-term market supply schedule for toys. Suppose Giocattolo and American Toy Company operate as competitors, and the cost schedules of each company are MCo = ATCO = $10. On the following graph, use the grey point (star symbol) to identify the competitive market equilibrium. Then, use the green triangle (triangle symbols) to identify consumer surplus in this case. Note: Select and drag the point from the palette to the graph. Dashed drop lines will automatically extend to both axes. Then select and drag the shaded region from the palette to the graph. To resize the shaded region, select one of the points and move to the desired position. ? PRICE (Dollars per toy) 20 18 16 14 10 00 6 4 2 0…
2. Four firms (A, B, C, and D) play a pricing game (i.e. Bertrand). Each firm (i) may choose any price Pi from 0 to ¥, with the goal of maximizing its own profit. Firms A and B have MC = 10, while firms C and D have MC = 20. The firms serve a market with the demand curve Q = 100 – P. All firms produce exactly the same product, so consumers purchase only from the firm with the lowest price. If multiple firms have the same low price, consumers divide their quantities evenly among the low-priced firms. Assume the firms choose price simultaneously. a. There are many equilibria in this simultaneous-move pricing game. Provide one equilibrium combination of prices, and argue that no firm has a unilateral incentive to deviate from these prices. Now assume firm A chooses price first. Firm B observes this choice and then chooses its own price second. Firm C chooses price third, and firm D chooses price last. b. Again, there are many equilibria in this sequential-move pricing game.…
What is the homogeneous-good duopoly Cournot equilibrium if the market demand function is Q=4,000-1,000p, and Firm l's and Firm 2's variable cost functions are V (q1) = 0.22qlandV (q2) = 0.22q2 , respectively. Select one alternative: Both firms produce 1300 units of outpuit. Both firms produce 1280 units of output. Both firms produce 1240 units of output. Both firms produce 1260 units of output.
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?
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.
In the Cournot equilibrium, how much profit does firm 1 and firm 2 make in profit? (Round off to at least 2 decimal places, use negative numbers for losses.)
Two firms compete by choosing the price of their respective (horizontally differentiated) products. They both have average and marginal costs equal to 1. Their demand functions are Q₁ = 6-3.5P1 +P2 and Q2= 5+P₁ -P2. P1 and P2 are the prices charged by each firm, respectively, and Q₁ and Q2 are the resulting demands. Suppose firm 1 sets its price first and then firm 2 sets its price. What price will firm 1 charge? Select one: a. P1=3 b. P₁ = 2 c. P₁ = 4 ○ d. d. P₁=1.5
Suppose two firms with differentiated products are competing on price. The reaction curve for Firm 1 is P₁ = 4 + 0.5 P2, and the reaction curve for Firm 2 is P2 = 2 + P1. What is the equilibrium price outcome in this market? Select one: a. P₁ = 10 and P2 = 8 P1 ○ b. P₁ = 10 and P2 = 12 c. P₁ = P2 = 8 ○ d. P₁ = 4 and P2 = 6 e. P₁ = P2 = 4
1. marginal costs e, = c, = c, = 20. The inverse demand function is given by P = 100 - Q. where Q = q, + 4: + 93- Consider a market with three firms (i - 1, 2, 3). which have identical a) Identify the reaction functions for each firm and compute the Cournot equilibrium, i.e., the market price and quantity. b) What happens to the market price if all three firms merge compared to part (a)?
Two firms - firm 1 and firm 2 - share a market for a specific product. Both have zero marginal cost. They compete in the manner of Bertrand and the market demand for the product is given by: q = 20 − min{p1, p2}. 1. What are the equilibrium prices and profits? 2. Suppose the two firms have signed a collusion contract, that is, they agree to set the same price and share the market equally. What is the price they would set and what would be their profits? For the following parts, suppose the Bertrand game is played for infinitely many times with discount factor for both firms δ ∈ [0, 1). 3. Let both players adopt the following strategy: start with collusion; maintain the collusive price as long as no one has ever deviated before; otherwise set the Bertrand price. What is the minimum value of δ for which this is a SPNE. 4. Suppose the policy maker has imposed a price floor p = 4, that is, neither firm is allowed to set a price below $4. How does your answer to part 3 change? Is it now…