(a) Consider a duopoly producing a homogeneous product. The market demand and cost functions are given by P=50-0.002(QA +QB) CA = 60000 + 10QA, CB = 30000 +5QB + 0.0008QB² (1) Calculate the price charged, output produced, and profit earned by each firm at the Cournot equilibrium. (ii) Calculate the price charged, output produced, and profit earned by each firm if A acts as leader and B as a follower(Stackelberg Equilibrium). (iii) Calculate the price charged, output produced, and profit earned by each firm if both desire to be leaders. (iv) Calculate the price charged, output produced, and profit earned by each firm at the collusive equilibrium. ure and in each case

(a) Consider a duopoly producing a homogeneous product. The market demand and cost functions are given by P=50-0.002(QA +QB) CA = 60000 + 10QA, CB = 30000 +5QB + 0.0008QB² (1) Calculate the price charged, output produced, and profit earned by each firm at the Cournot equilibrium. (ii) Calculate the price charged, output produced, and profit earned by each firm if A acts as leader and B as a follower(Stackelberg Equilibrium). (iii) Calculate the price charged, output produced, and profit earned by each firm if both desire to be leaders. (iv) Calculate the price charged, output produced, and profit earned by each firm at the collusive equilibrium. ure and in each case

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Respond to the question with a concise and accurate answer, along with a clear explanation and step-by-step solution, or risk receiving a downvote.

(a) Consider a duopoly producing a homogeneous product. The market demand and cost functions
are given by
P=50-0.002(QA +QB)
CA=60000 + 10QA,
CB = 30000 +5QB + 0.0008QB²
(1) Calculate the price charged, output produced, and profit earned by each firm at the Cournot
equilibrium.
(ii) Calculate the price charged, output produced, and profit earned by each firm if A acts as leader
and B as a follower(Stackelberg Equilibrium).
(iii) Calculate the price charged, output produced, and profit earned by each firm if both desire to be
leaders.
(iv) Calculate the price charged, output produced, and profit earned by each firm at the collusive
equilibrium.
ulrot failure and in each case

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Step 1: Solution for cournot equilibrium.

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Step 2: Continuation of previous step.

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Step 3: Continuation of the previous step.

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Step 4: Solution for stackelberg equilibrium.

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Step 5: Continuation of the previous step.

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Step 6: Solution for both leadership output.

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Step 7: Continuation of the previous step.

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