c)Firms 1 and 2 are considering a merger. Under the merger, a newfirm would be created with profit function 12(91, 92, 93) = ₁ + 1², so that thisnew firm would be a multi-plant firm.In equilibrium, the new firm would produce ₁ =In equilibrium, the new firm would produce 92=d)in plant 1.in plant 2.The total profit of the new firm in equilibrium would beHence assuming firms 1 and 2 split the profits evenly, the firms◆ merge.The total profit of the monopolist firm in equilibrium ise)Now, suppose that all three firms are considering a merger! Inequilibrium, what quantity would this monopolist produce? Q = 91 +92 + 93 =Hence, assuming that firms 1, 2, and 3 split the profits evenly, the firmsmerge. A market comprises three firms i E {1, 2, 3} competing in quantities. Inversemarket demand is given by p(Q) = 100 - 50, where Q = 9₁ +92 +93. Eachfirm i has marginal cost c₁, and therefore profit functionTi (91, 92, 93) = (p - ci)qi.a)Suppose c₁ = 1, c₂ = 4, and c3 = 7. Find the best responsefunctions for each firm by filling numbers in the blanks below.9 (92, 93) =(92 +93).9₂ (91, 93) =(91 +93).93 (91, 92) =(91 +92).b)In equilibrium, we know that the level of output for each firm is q₁ =5.4, 92== 4.8, 93 = 4.2.Compute the profit of firm 1: ₁ =Compute the profit of firm 2: ₂ =

Total Number of firms = 3 Market demand function : P = 100 - 5Q,Where,, 99, 254); position:…

A market comprises three firms i E {1,2,3} competing in quantities. Inverse market demand is given by p(Q) = 100 - 50, where Q = 91 +92 + 93. Each firm i has marginal cost c;, and therefore profit function

A market comprises three firms i E {1,2,3} competing in quantities. Inverse market demand is given by p(Q) = 100 - 50, where Q = 91 +92 + 93. Each firm i has marginal cost c;, and therefore profit function

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

Answer letter b only
Two firms compete on price every year. The inverse demand function each firm faces depends on which firm has chosen the lowest price that year. The one that did captures the entire market. If, on the other hand, both prices are the same then they split the market evenly. Consumers round up prices to the nearest integer. For the firm with the lowest price p, demand is given by: q = 24-2p: Marginal costs are constant and equal to $4 for both firms. a. Define the Normal form of the stage game and determine the Nash Equilibria, the Cooperative Equilibrium and the Optimal Deviation from cooperation. b. For the once repeated (2 stages) game, determine if a Nash Equilibrium exists that improves on simply playing the (better) Nash Equilibrium of the stage game twice c. For the infinitely repeated game, determine what the interest rate would have to be to prevent the firms from cooperating. d*. Determine the relation between the interest rate and the number of punishment periods in a…
Problem 2. 1 Once again refer to the market for motherboards and assume there is only one firm that produces these delicious bundles. Market For Computer Motherboards Price $120 $110 $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 0 D 20 40 60 80 100 120 140 160 Quantity 180 200 220 240 A) If the cost function of this firm is C(Q)=- plot the marginal cost, marginal 2 revenue on the graph. Also derive the demand and inverse demand functions. What is the price at which the monopoly will choose to sell in this market.
Consider the following demand schedule for a market in which there are two firms: Firm A and Firm B. Assume each firm has constant costs of production of $50 (MC ATC= $50). Q (units) P ($)| TR (S) MR ($) 0. 200 1 190 190 190 180 360 170 3. 170 510 150 4 160 640 130 150 750 110 6. 140 840 90 7 130 910 70 8. 120 960 50 110 990 30 10 100 1000 10 Suppose Firm A cheats on the cartel agreement by producing one extra widget. In this case, Firm As profit will be and Firm BOs profit will be .? $240; $0 $300: $0 $300: $240 none of the above Cop
The inverse demand function is P = 200 – 2Q. Total cost is zero. Calculate output, price, and profit for any one of the market structures below. Assume that each firm maximizes profits. Show your work. (a) Perfect competition (b) Monopoly (c) Duopoly (Cournot competition) (d) Duopoly (Bertrand competition)
Consider the following model of Cournot competition with fixed cost. There are two identical firms, and the inverse demand function is given by 5. P(q1, 42) 19 – (q1 + 92). Firms have constant marginal cost, but any firm operating in this market (that is, q; > 0) must pay a license fee F. In particular, firm i's cost function is if qi = 0 c:(4;) = { F+4 if qi > 0. (a) Derive the firms' best response functions. (b) For what values of F, if any, will there be a symmetric (pure) Nash equilibrium in which firms produce a positive quantity? What is the Nash equilibrium in that case? (c) For what values of F, if any, will both firms shutting down be the Sy anmetric (pure) Nash equilibrium?
Consider an industry comprised of three identical firms faced with a linear cost function given by: C(qi) = cqi; for i = 1; 2; 3. Let inverse market demand be given by: P(Q) = a - bQ; where Q = q1 + q2 + q3.a. Compute the Cournot equilibrium; that is, find prices, quantities, and profits.b. Suppose that firms 1 and 2 merge, converting the market into a duopoly consisting of the “superfirm” and firm 3. Compute the new Cournot equilibrium. Once again find prices, quantities, and profits.c. Suppose that all three firms merge. Compute quantities, prices, and profits for the cartel solution.d. Suppose that firm 1 and 2 represent two members of OPEC – Saudi Arabia and Venezuela, say – while firm 3 is a non-OPEC oil exporting country – Russia, say. Describe the dynamics of OPEC. (Hint: re-interpret the solution to part 2, as 1 firm deviating from the fully cartelized solution. Is it convenient to have a partial cartel?)
Consider a market with two identical firms, Firm A and Firm B. The market demand is:1P = 100 — —2Qwhere Q = QA + QB . The cost conditions are MCA = MC, = ACA = AC, = 24. (Hint: Round your solutions to 2 decimal places.)Assume this market has a Stackelberg leader, Firm A. Solve for the quantity, price and profit for each firm. Explain your calculations.How does this compare to the Cournot-Nash equilibrium quantity, price and profit? Explain your calculations.
Suppose that firms A and B have the same product in the same market, where Qd = Qa + Qb = 300 - 2p is demand And the firms have a simple cost curves of TCa = 5Qa and TCb = 10Qb Find Cournot Equilibrium & Find the Stackelberg equilibrium if A is the leader Thank you!
Consider an industry with N firms that compete by setting the quantities of an identical product simultaneously. The resulting market price is given by: p = 1000 − 4Q. The total cost function of each firm is C(qi) = 50 + 20qi . (a) Derive the output reaction of firm i to the belief that its rivals are jointly producing a total output of Q-i . Assuming that every firm produces the same quantity in equilibrium, use your answer to compute that quantity. (b) Suppose firms would enter (exit) this industry if the existing firms were making a profit (loss). Write down a mathematical equation, the solution to which would give you the equilibrium number of firms in this industry. You don’t have to solve this equation.
Suppose the airline industry consists of only two airlines, Jumbo jet and Kenya airways. Let the two firms have identical costs C(Q) = 40Q, where i = 1,2. Assume that the demand curve for the industry is given by P=100-Q
An upstream firm (U) sells an input to a downstream firm (D) which resells it to consumers. The marginal cost of U is 4. Each unit is sold by U to D at a transfer price r. Requirement final is p = 12 - y. a) Suppose U and D are separate firms. Find r, y and p. b) Suppose U and D are one integrated firm. Find p and y. c) Suppose the firms are not integrated, but firm U uses a two-part tariff: it requires payment of r for each unit sold to D; in addition, it requires payment lump sum of T. Find the value of r that U will choose. Find the minimum and maximum values by T. d) Suppose the firms are not integrated, but U imposes a resale price control on firm D. Find the value of r that U will choose, and the constraint that it will impose on the price final p