2 An industry has two firms. Firm 1's costfunction is TC1(q1) = 2q1 + 500 and firm 2'scost function is TC2(q2) = 2q2 + 400. Thedemand curve for the output of thisindustry is a downward-sloping straightline. In a Cournot equilibrium, where bothfirms produce positive amounts of output,a. the firm with lower fixed costs producesmore. b. the firm with higher fixed costsproduces more. c. both firms produce thesame amount of output. d. there is lessoutput than there would be if the firmscolluded to maximise joint profits

Cournot model is a part of oligopoly market. The firms compete on the basis of output in the Cournot…

An industry has two firms. Firm 1's cost unction is TC1(q1) = 2q1 + 500 and firm 2's cost function is TC2(q2) = 2q2 + 400. The demand curve for the output of this ndustry is a downward-sloping straight ine. In a Cournot equilibrium, where both

An industry has two firms. Firm 1's cost unction is TC1(q1) = 2q1 + 500 and firm 2's cost function is TC2(q2) = 2q2 + 400. The demand curve for the output of this ndustry is a downward-sloping straight ine. In a Cournot equilibrium, where both

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed in the attached table. If the tenants have the right to be free of loud music enforced through a property rule, how many bands will play in Rock‐n‐Roll Bar on a Saturday night? A. Zero B. One C. Two D. Three E. It depends on transaction costs
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Fill in the table below, giving a numerical value for letters A, B, C, and D. TC AFC AVC 50 1 90 A B D 30 2.
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There is a bar on Off‐Main Street called the Rock‐n‐Roll Bar. All the people that go to that bar like to listen to rock‐n‐roll music, and they love live bands. If the bar owner brings bands in to play music on a Saturday night, she will make a lot of money. However there are tenants in this building who get annoyed by the loud music. The benefits/costs to the owner/tenants of having zero, one, two or three bands on a Saturday night are listed below. Assume the bar owner has the right to hire as many bands as she likes. Iftransaction costs were $90, split between the bar owner and the tenants, how manybands would play? What would social welfare be? A. Three bands would play and social welfare would be ‐100.B. Two bands would play and social welfare would be 75.C. Two bands would play and social welfare would be ‐15.D. No bands would play and social welfare would be 0.E. Three bands would play and social welfare would be ‐190