An industry has two firms. The inverse demand function for this industry is p = 74 − 4q. Both firms produce at a constant unit cost of $26 per unit. What is the Cournot equilibrium price for this industry?
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An industry has two firms. The inverse
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- A) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 90 – 3Q. The marginal cost for each firm is €18. Calculate the level of output that each firm would produce at the Cournot equilibrium. B) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 60 – Q. The marginal cost for each firm is €36. What price should Firm 1 charge at the Cournot equilibrium? C) Consider the production function Q = 10KL. Will the MRTS for this production function remain constant along the Q = 200 isoquant? Explain briefly.There are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?Alpha and Gamma are the only two phone handset manufacturers in the world. Each firm has a cost function given by: C(q) = cq + q?, where q is number of phones produced and c=70. The market demand for phones is represented by the inverse demand equation: P = a - bQ where Q = q1 + q2 is total output, a=250 and b=1. Suppose that each firm maximizes its profits taking its rival's output as given (i.e. the firms behave as Cournot oligopolists). a) What will be the equilibrium quantity selected by each firm? What is the market price? What is the profit level for each firm? Equilibrium quantity for each firm , price , profit b) It occurs to the managers of Alpha and Gamma that they could do a lot better by colluding. If the two firms were to collude, what would be the profit-maximizing choice of output for each firm? What is the industry price? What is the profit for each firm in this case? Equilibrium quantity for each firm , price , profit c) What minimum discount factor is required for…
- Consider an industry composed of 3 firms and facing demand: P(Q) = 1- Q, where Q = q1 + q2 + q3.The three firms are identical, each producing using a plant that exhibits quadratic cost C(q.) = q?. What are the Cournot equilibrium quantity and prices?Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given by P = 120 - 3Q. The marginal cost for each firm is €12. Calculate the level of output that each firm would produce at the Cournot equilibrium.Here is a market with three firms: 1, 2, and 3. The demand curve is P=100-Q. There is no fixed cost but the marginal cost 10 for all firms. Firm 1 is a leader firm so that it decides the quantity Q1 first. Then two firms respectively decide their quantities Q2 and Q3 simultaneously. 1) At an equilibrium (SPE), Q1 is Q2=Q3= 2) At the equilibrium, (the market quantity) Q= and (the market price) P= 3) The profit of firm 1 is while the profit of firm 2 and 3 respectively is
- The fastfood industry can be considered a perfectly competitive industry between two competitive firms: Jollibee and McDonalds. The total cost function of one of the firms is expressed by C(Q) = 100 + 4Q2, and demand is P = 80 – 4Q Find the equilibrium price and total quantity that the industry produces. Suppose that Jollibee successfully acquired McDonalds through a hostile takeover. What would be the new equilibrium price and quantity if MR = 80 – 4Q? Is this hostile takeover beneficial?Firm A and Firm B are the only two firms in a market where price is determined by the inverse demand function: P = 147 - Q. Q is the sum of Firm A and Firm B's output, so Q = 9A + 9B Firm A's total cost function is given by TCA(9A) = 39A Firm B's total cost function is given by TCB(9B) = 89B If these firms Cournot compete (simultaneously setting quantities), what will market price be when both firms are maximizing profits in equilibrium? (Note: The answer may not be a whole number, so round to the nearest hundredth)The inverse demand curve for a product is p = 20 - 0/5, where Q is the total volume brought to the market. At present two firms serve this market. Firm 1 has constant marginal costs of 5, while Firm 2 has constant marginal costs of 2. Both firms have fixed costs of 100. a) Assuming the fixed costs are sunk, calculate the equilibrium quantities, price and profits for the two firms. b) Now assuming the fixed costs are not sunk, calculate the equilibrium quantities, price and profits for the two firms. c) Discuss any competition issues raised by your answer in part b). d) Discuss the theoretical relevance of sunk costs to competition in markets.
- Consider a number of firms facing identical total cost function of the form: TC = Q3 -6Q2+10Q. The marginal cost associated with the cost function is: MC=3Q2 -12Q+10. A) Calculate the level of production that minimizes average variable cost. B) Calculate the shutdown price for each firm. C) Suppose market demand is given by Q=50-4P. Calculate the competitive equilibrium price and quantity for each firm. Assuming all firms are symmetric, how many exist in the long-run?The Canadian retail market for roasted whole coffee beans is dominated by two firms: Tim Hortons (T) and Kicking Horse (K). The market demand function is given by P(Q)=64−0.5Q. Assume it is possible to produce partial units of output. Kicking Horse's marginal cost for each kg of roasted coffee beans is $3. Tim Horton's marginal cost for each kg of roasted coffee beans is $5 (although they've been around longer than Kicking Horse, they've only recently expanded their product line for consumers to brew their own coffee at home). What is the Cournot market equilibrium (P and Q)?Image uploaded answer is not allowed please dear expert
